Tax season is stressful for individuals and business owners as they scramble to file their tax returns accurately and on time. Some notable changes and challenges for the 2017 Tax Season may affect your 2016 tax year filings. Here are some of the biggest changes along with some of the potential hurdles, and what you can do to be prepared.
Tax refund delays are expected due to a new law.
In recent years, average tax refunds have been around $3000.00. For lots of folks, that’s the biggest single amount of money they get at one time during a year. This year, though, a new federal law will delay tax refunds for thousands of middle- and low-income taxpayers who file early in 2017.
The delay is going to be caused by the Protecting Americans from Tax Hikes Act of 2015. Section 201 of the Act states that “no credit or refund for an overpayment for a taxable year shall be made to a taxpayer before February 15 if the taxpayer claimed the Earned Income Tax Credit or Additional Child Tax Credit on the return.” This law takes effect January 1, 2017.
The purpose of the new law and the delay is to reduce tax fraud and identity theft. The IRS has decided to focus its efforts on giving a second look to returns claiming these two tax credits. Along with the refund delay, filers should also be prepared to submit more documentation than usual to prove the validity of these tax breaks.
A new filing deadline for business partnerships.
Another result of legislation enacted in 2015 is that some businesses will have new filing due dates this spring. This years, business partnership tax returns—Form 1065—will have a new filing deadline of March 15.
This new deadline is a month earlier than previous years. If you have a partnership that is not run on a traditional calendar year, your copy of Form 1065 must be sent in by the 15th day of the third month after the close of your company’s tax year.
A new filing deadline for C corporations.
The 2017 tax season brings a new filing date for tax returns for C corporations—April 15. The previous deadline for C corporation returns—Form 1120—was March 15, so this change gives C corp. owners an extra month to file their business returns.
For C corporations that operate on non-calendar year schedules, Form 1120 will now be due by the 15th day of the fourth month after the tax year comes to a close. There is one exception: Up until 2025, C corporations that have tax years closing on June 30 will still have a filing deadline of September 15.
Preparing for the 2017 Tax Season
Get your tax records in order.
It’s time to find and organize all the receipts you need to claim your tax deductions. Review your 2015 income tax return and any relevant records you will need to reference when filing your 2016 return.
Put aside some money now.
Since tax refund delays are expected, don’t be caught shorthanded financially when you’d normally be expecting to receive a nice fat refund check. Set aside a small portion of your income now so that you’ll be prepared to handle any bills or expenses in the spring while waiting for your tax refund.
Consider working with a professional.
If you normally do your own tax preparation, changes in this year’s tax code may mean it’s a good time to consider putting your tax filing needs in the the hands of an experienced professional. Not only will this guarantee that you’ll meet every deadline, but also you’ll know that you’re taking full advantage of all the tax breaks you qualify for to significantly reduce your tax liability.
If you don’t know a reliable, professional accountant in the Central Texas Area, please feel free to give us a call at 512-535-3774. We work with some of the best and will be happy to point you in the right direction.