The Associated Press
WASHINGTON — The Internal Revenue Service’s battle against fraud and identity theft is intensifying as the tax filing season opens, and some of the neediest taxpayers are getting caught in the middle.
The agency is barred from issuing refunds before Feb. 15 on any returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit. Congress mandated the delay to give the IRS more time to review returns to try to catch fraudulent ones before refunds are paid out.
In reality, taxpayers taking these credits will probably have to wait even longer to get their refunds — until the week of Feb. 27, the IRS says, because of weekends and the President’s Day holiday.
Dave DuVal, vice president of customer advocacy at TaxAudit.com, says the impact on these taxpayers could be tremendous. “They live paycheck to paycheck, and this is money they’re counting on,” he said.
Still, the attempt to reduce fraud “is a positive thing overall,” said Greg Rosica, tax partner at Ernst & Young.
The IRS began accepting returns on Jan. 23, and tax experts recommend that Americans continue to file their returns early, even with the refund delays.
“For this tax season, it’s more important than ever for taxpayers to plan ahead,” IRS Commissioner John Koskinen said in a statement.
This year’s filing deadline is Tuesday, April 18, since the traditional April 15 date falls on a Saturday, and D.C. Emancipation Day is observed on April 17.
Of course, taxpayers who need longer can request an extension. “Getting a filing extension avoids the late filing penalty, but it doesn’t avoid the late payment penalty,” said Barbara Weltman, a consultant and author of books on taxes, law and finance.
So the advice from tax experts: To avoid the late payment penalty, estimate the amount due and pay it before the April 18 filing deadline. But even with that, you won’t be able to avoid interest on payments made after the deadline.
Last year, the IRS processed more than 152 million returns. Electronic filing was up 2.4 percent, continuing a long-term trend. The average refund was $2,860, up 2.3 percent or $63 from the previous year, the agency said.
The IRS continues to see an increase in taxpayers requesting direct deposit for their refunds. That’s the fastest way to get a refund, the agency advises.
What’s new this year
“Because so many provisions have been made permanent and we have such modest inflation, there are not dramatic new things,” Weltman said.
The personal exemption has been increased to $4,050. But that amount is phased out for taxpayers at higher income levels. Similarly, those with higher adjusted gross income might not be able to get the full value of their deductions.
The alternative minimum tax is still around, but the exemption has increased to $53,900 for single taxpayers, $83,000 for those married filing jointly and $41,900 for married filing separately.
People who have been issued an individual taxpayer identification number, or ITIN, instead of a Social Security number may have to renew it before filing their tax returns. The IRS says current ITINs will no longer be valid if they weren’t used at least once in the last three years or if the number was issued before 2013.
For those who didn’t have health insurance in 2016, the penalty, or “shared responsibility” in government parlance, is $695 for each adult and $347.50 for children under 18, or a maximum of $2,085. But remember there are two ways to compute the penalty —