Are you Ready for Tax Season?

Tax season is always a busy time for accountants, as they hurry to prepare and file documents with the Internal Revenue Service on behalf of their clients. The 2017 tax season begins on Monday, Jan. 23, 2017, according to a recent announcement. Some changes the IRS also announced include a different tax deadline day and expected delays for certain types of tax returns.

The New Tax Season

The IRS begins accepting electronically filed returns on Jan. 23. The IRS expects to receive 153 million individual tax returns in 2017, with 80 percent of them prepared and submitted electronically. Many tax preparation companies will begin processing tax returns prior to Jan. 23 and wait until that day to submit them. The IRS notes that there is no advantage to filing paper returns prior to the Jan. 23 opening date.

New Law

A new federal law requires the IRS to hold tax refunds on returns claiming the Earned Income Tax Credit and the Additional Child Tax Credit until Feb. 15. It takes several days for these refunds to fully process and reach financial institutions. "For this tax season, it's more important than ever for taxpayers to plan ahead," says IRS commissioner John Koskinen. With the addition of weekends and the President's Day holiday, taxpayers affected by this law could experience a significant delay, with most refunds not being released until the last week of February.

New Deadline

Traditionally, the deadline to submit all tax returns is April 15. In 2017, April 15 falls on a Saturday, so the IRS would normally move the deadline to the following Monday. However, Emancipation Day (a legal holiday observed in Washington, D.C.) will be observed on Monday, April 17, moving the tax deadline one day later to Tuesday, April 18. This revised deadline may add additional wait time for tax refunds, as last-minute taxpayers inevitably scramble to file online or crowd the post office.

Advice to Taxpayers

The IRS encourages taxpayers to retain copies of their previous tax returns for at least three years, especially if filing electronically. Tax software requires the previous years' adjusted gross income, and the electronic filing PIN is no longer an option. For assistance, taxpayers should visit the IRS website. "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,” says Koskinen.

As the 2017 tax season looms, familiarize yourself with the major changes made by the IRS, and prepare to inform your clients of tax strategies that are in their best interest. It's about to be a very busy few months, but these new changes don't have to be obstacles to a successful tax season.

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