Tax Season Begins in the U.S.: Consult with a Tax Professional
January 30, 2018
Filing season for the 2017 tax year began this week, with an April 17 deadline.
The IRS set this week as the start time for filing to ensure the security of key tax processing systems in the wake of the Equifax breach, and to provide sufficient time to assess any potential impact of the changes to tax legislation.
The IRS anticipates that it will receive more than 150 million individual tax returns this year.
Concerns Over Equifax Breach
It is unclear whether last year’s massive Equifax breach will affect this year’s tax filings, but experts have raised concerns that the hack could potentially contribute to tax fraud. Social security numbers that were exposed during the breach could be used to file fraudulent tax returns in an attempt to obtain refunds.
The IRS notes that tax-related identity theft is among the top scams that the IRS has identified. The IRS notes that it still paid out almost $240 million in “suspect refunds” during last tax season, despite increased safeguards which had allowed them to stop 787,000 fraudulent returns (totaling more than $4 billion).
Filing early can help prevent potential issues.
However, the IRS does caution that households that file early may have to wait to obtain certain returns. The IRS notes that it cannot issue refunds for the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) prior to mid-February. These delays are due to anti-fraud legislation that allows the IRS to attempt to identify fraudulent claims. The IRS expects that the earliest EITC/ACTC refunds will be available on February 27, 2018 if there are no other issues with the return.
Impacts of the Recent Tax Reforms
The majority of the changes stemming from the Republican’s Tax Cuts and Jobs Act (TCJA) will not take effect until the 2018 tax year, there is at least one major change that will affect this year’s filing season: medical expense deductions.
Previously, tax filers who wanted to take advantage of the medical expense deduction could only deduct qualifying costs that exceeded 10% of their adjusted gross income. Now, that number has been reduced to 7.5%.
Relevant Forms Needed for Filing
It is advisable to begin to gather all relevant documents needed to file your return as soon as possible.
Taxpayers can expect to receive the forms needed for proper filing at various times during the next two months, depending on the forms, with the earliest being the W-2. Employers must provide employees with a W-2 by January 31.
|FORM||PURPOSE OF FORM||EXPECTED DATE OF RECEIPT|
|W-2||Wage and tax statement||January|
|1098-E||Student loan interest (over $600)||January|
|1098-T||Tuition and education costs||January|
|1099-B||Stock sales and capital gains||January to mid-February|
|Dividends paid and interest earned (over $10)||January to mid-February|
|1099-G||State and local tax refunds||January|
|1099-K||Credit card payments for sharing economy income||January|
|1099-MISC||Non-employee income, rental income||January|
|1099-R||Distribution from an IRA or retirement plan||January|
|1099-SA||Health savings account distributions||January to mid-February|
|K-1||Partner’s share of income, deductions and credits||Depends on the business’ extended due date for its own returns|
|SSA-1099||Social Security income||January|
Once you have gathered all information needed, including any of the above forms that apply to you as well as supporting documentation, you should consult with a tax professional. Help from someone with extensive knowledge of tax laws and regulations can help you maximize your return and save you money in the long-run.
At Feigenbaum Law, we work with our clients to create personalized tax solutions that will streamline their compliance requirements and take advantage of all possible current and future opportunities to reduce their tax burden. Our in-depth knowledge of tax regimes in both Canada and the U.S. allows us to create the best tax strategy possible for our clients. We offer services to clients in the US, Canada and around the world. Contact us to learn more about how we can help or call us at (905) 695-1269 or toll free at (877) 275-4792.