More IRS Tips to Help You and Your Clients Prepare for the Tax Busy Season

strategic thinking
vgajic_istock_strategicthinking

For your clients who are slackers about preparing their tax documentation, the IRS is offering tips to help ease the pain of busy season.

Charitable Contributions

They are deductible in the year made. So even if taxpayers charge a donation to a credit card before Dec. 31 but don’t pay the bill until 2018, the donation counts for 2017.

Donations made by check count for 2017 if they are mailed by Dec. 31.

Retirement Accounts and Plans

Taxpayers who are more than 70 1/2 years old generally must receive payments from their individual retirement accounts (IRAs) and workplace retirement plans by the end of 2017. However, there’s a special rule that allows those who reach that age in 2017 to wait until April 1, 2018 to get the payments.

Most workplace retirement account contributions should be made by the end of the year. But taxpayers can make 2017 IRA contributions until April 17, 2018. For 2018, the limit for a 401(k) is $18,500. For traditional and Roth IRAs, the limit is $6,500 if taxpayers are at least 50 years old, up to $15,500 for a Simple IRA for people 50 or older.

Further information is available at IRS.gov regarding contribution limits and cost-of-living adjustments for pensions and other retirement plans.

Refunds

Taxpayers can’t count on getting a refund by a certain date, particularly for big purchases or paying other financial obligations.

Taxpayers who have relocated during the year should be sure that the U.S. Postal Service, employers and the IRS know their new address.

Use IRS Form 8822 (Change of Address) to notify the agency.

Taxpayers who obtain health insurance through the Affordable Care Act’s Marketplace should notify the marketplace when they move out of their coverage area.

Some refunds can’t be issued before mid-February. By law, the IRS cannot issue refunds before mid-February for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit. The IRS expects the earliest refunds related to those credits to be available in taxpayer bank accounts or on debit cards starting on Feb 27, 2018, if they chose direct deposit and there are no other issues with the tax return.

Name Changes

Notify the Social Security Administration (SSA) so the new name will match IRS and SSA records. The SSA also should be notified if a dependent’s name changed.  A mismatch between the name shown on your tax return and the SSA records can cause problems in the processing of a return and may even delay a refund.

Individual Taxpayer Identification Numbers (ITINs)

ITINs not used on a tax return at least once in the past three years will expire Dec. 31. All ITINs issued before 2013 with middle digits of 70, 71, 72 or 80 (Example: 9XX-70-XXXX) will also expire at the end of the year. As a reminder, ITINs with middle digits 78 and 79 that expired in 2016 can also be renewed. Only taxpayers who need to file a U.S. federal tax return or are claiming a refund in 2018 must renew their expired ITINs.

Those who fail to renew before filing a return could face a delayed refund and may be ineligible for certain tax credits. More information is available here.

2016 Tax Returns

This should go without saying but … keep ‘em. Taxpayers may need the 2016 return to ease the filing of the 2017 return. Taxpayers who file via software programs for the first time may need to provide their 2016 adjusted gross income (AGI) to e-file their 2017 return.

Taxpayers who do not have a copy of their 2016 return and are existing users can log in to IRS.gov/account to get their AGI. If requested online or by calling 800-908-9946, the IRS will mail a tax-return transcript. Allow five to 10 days for delivery.

 

About Terry Sheridan

Terry Sheridan

Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.

Replies

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.