As the House and Senate debate the details of the proposed Tax Cuts & Jobs Act, I thought I would share some of the main proposals where there is some mutual agreement.
Here is a link to a summary of the proposals:
There is a lot of debate about who these changes will help the most and it’s very clear it will indeed help lower wage income earners who don’t itemize and some middle and upper income earners who will avoid AMT, however, if the SALT (state and local income tax) deductions are fully repealed it will penalize home owners who exceed the proposed new standard deduction.
Of other significance, the personal exemptions have been repealed and even with the more favorable rates and an increased standard deduction, families with children and income greater than $230,000 will begin lose the increased child tax credit thus negatively impacting their taxes.
Here is a link to a summary of the Tax Cuts & Jobs Act.
Don’t hesitate to reach out to us and to see how this historic act will impact you.
WASHINGTON, D.C. (DECEMBER 9, 2016)
BY MICHAEL COHN
The Internal Revenue Service said Friday that next tax season will begin on Monday, Jan. 23, 2017, while warning some taxpayers to expect longer waits for their tax refunds. The tax day deadline will be April 18.
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The IRS said it would start accepting electronic tax returns on January 23 and it anticipates more than 153 million individual tax returns to be filed next year. The IRS believes more than four out of five tax returns will be prepared electronically using tax preparation software, as was the case last year.
However, even with the January 23 start date, the IRS also pointed out that many software companies and tax professionals will begin accepting tax returns before that date and then they’ll submit the returns when the IRS’s systems open. The IRS will also start processing paper tax returns on January 23. The IRS noted there is no advantage to filing tax returns on paper in early January instead of waiting until January 23 for the IRS to begin accepting e-filed returns.
The IRS also reminded taxpayers that a new law will require the agency to hold back tax refunds claiming the Earned Income Tax Credit and the Additional Child Tax Credit until February 15. The IRS wishes taxpayers to be aware it will take several days for these tax refunds to be released and processed through financial institutions. Factoring in weekends and the President’s Day holiday, the IRS is warning many affected taxpayers may not have actual access to their tax refunds until the week of February 27.
“For this tax season, it’s more important than ever for taxpayers to plan ahead,” IRS Commissioner John Koskinen said in a statement. “People should make sure they have their year-end tax statements in hand, and we encourage people to file as they normally would, including those claiming the credits affected by the refund delay. Even with these significant changes, IRS employees and the entire tax community will be working hard to make this a smooth filing season for taxpayers.”
The IRS also reminded taxpayers to hold onto copies of their prior-year tax returns for at least three years. Taxpayers who are changing the tax software products they use this filing season will need to get their adjusted gross income from their 2015 tax return in order to file electronically. The Electronic Filing Pin is no longer an option. Taxpayers can visit IRS.Gov/GetReady to get more advice on preparing to file their 2016 tax return.
The filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017, instead of the traditional April 15 date. In 2017, April 15 falls on a Saturday, and this would usually move the filing deadline to the following Monday, April 17. However, Emancipation Day—a legal holiday in the District of Columbia—will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 18, 2017. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.
“The opening of filing season reflects months and months of work by IRS employees,” Koskinen said. “This year, we had a number of important legislative changes to program into our systems, including the EITC refund date, as well as dealing with resource limitations. Our systems require extensive programming and testing beforehand to ensure we’re ready to accept and process more than 150 million returns.”
The IRS noted that it has been working in partnership with the tax industry and state revenue departments as part of its Security Summit initiative to strengthen tax processing systems to protect taxpayers from identity theft and tax refund fraud. Several new provisions are being added in 2017 to expand on the progress made this past year.