There are several new changes for the upcoming tax filing season. Business as usual is not what it was a few years ago or even last year.
The IRS will start accepting tax returns on January 23, 2017. I remember that the tax season every year started on January 15 and if you filed earlier you would receive your refund in two weeks or less, unless there was something wrong with your statement. Taxpayers claiming the earned income tax credit, child tax credit, additional child tax credit, or education credit refunds will be behind, including the portion that has nothing to do with the credits. These refunds will not be issued before February 15, 2017.
Although the IRS will start issuing refunds on February 15, your refund may not reach your bank until the week of the 27th.
Let’s take a look at what qualifies a taxpayer to claim the earned income tax credit, the child tax credit, the additional child tax credit, and the education credit. Let’s talk about dependents, let’s face it, without dependents you can’t claim the first three credits.
Dependent
The dependent must be related to you by blood, marriage, or adoption to qualify for the tax credits. Dependents must be your son, daughter, stepchild, adopted child, brother, sister, stepbrother/sister, grandchild, niece, nephew. They must also meet the age test to be under 19 at the end of the year or under 24 if they are in college and younger than you. You have to pay more than half of their support and they lived with you more than half of the year. Your dependents’ income has to be less than $4,000 in 2015, it will be a little higher for 2016.
Dependents can be claimed by ONLY taxpayer even if more than one person qualifies to claim the dependent. There are tiebreaker rules that we will not discuss here.
education credits
To qualify for an education credit, your dependent must attend a school of higher education, the credit is not for elementary or secondary school students attending a private school. Students can claim the American Opportunity Credit during the first four years they attend school for higher education. After the first four years, your dependents may qualify for the continuing education credit. This year, students must have a 1098T to qualify for the education credit.
Individual Taxpayer Identification Number (ITIN)
There may be delays in processing people with expiring ITIN numbers. If you have not filed your ITIN used on a tax return at least once in the last three years or your average number for your ITIN is 78 or 79, it could expire at the end of December 2016. If you plan to file a tax return at next year and your ITIN is about to expire, you must renew it before it expires.
Taxpayers will be affected by the 2015 Path Act changes.
- Individuals cannot file an amended return to claim the EITC for prior years in which a qualifying child did not have a Social Security Number. This provision became effective on the date the PATH Act became law on December 18, 2015.
- The IRS can bar taxpayers from claiming the EITC for 10 years if it finds they have fraudulently claimed the credit.
- The EITC is now subject to the erroneous claim penalty for refunds and credits.
- Incorrectly claimed refundable credits will now be considered when determining the underpayment penalty.
