Some 2016 Federal Tax Refunds Will Be Delayed


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If you are claiming the Earned Income Credit (EIC) or the Additional Child Tax Credit (ACTC), your refund will be delayed until after February 15, 2017.

Part of the Protecting Americans from Tax Hikes (PATH) Act of 2015 requires the IRS to allow more time to review returns with these credits and verify information, including but not limited to:

  • Income
  • Social Security Number(s)
  • Names (must match the Social Security Database)
  • Historical information (did taxpayer claim the same individuals in prior years)

Anyone claiming these credits should note the IRS has cautioned taxpayers not to expect their refunds until at least the week of February 27, 2017.  Also the delay applies to your entire refund, not only the portions associated with the EIC and/or the ACTC.

If you are expecting a refund including either or both of these credits, you should take the delay into account especially if you normally use your refund to pay bills, make a major purchase, etc.  You can check the status of your federal refund online here.

Some tax changes (including the delays mentioned above) can be seen below:

2016 Tax Highlights Video

Thoughts or questions?  Please let me know using the form below.

Cheers!

Thomas C. Hodge
Founder

Hodge Group LLC
3943 N. Austin Avenue
Chicago, IL 60634

773.237.6369

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2016 Individual Income Tax Returns Can Be Filed Starting January 23, 2017


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The IRS announced today that tax returns for 2016 (filed in 2017) will be accepted starting Monday, January 23, 2017.  You may file returns before that date but the IRS will not be processing returns until January 23rd.

Returns claiming the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) will be reviewed more closely and any refunds claiming these credits will not be issued until at least February 15, 2017 and the IRS cautions taxpayers with these credits may not get refunds until February 27, 2017, at the earliest.

Normally Individual Income Tax returns are due by April 15th but that day falls on a Saturday so the deadline will be Tuesday, April 18, 2017 due to the preceding day, April 17, being a legal holiday (Emancipation Day) in the District of Columbia and the IRS will not process returns on that day, even in offices outside of DC.

Your tax preparer can begin tax preparation in January but remember your returns will not be accepted by the IRS until January 23rd and some refunds may be delayed so please keep this in mind when preparing your taxes this year.

Thoughts or questions?  Please let me know using the form below.

Cheers!

Thomas C. Hodge
Founder

Hodge Group LLC
3943 N. Austin Avenue
Chicago, IL 60634

773.237.6369

www.thehodgegroup.com

www.taxbillappeals.com – Property Tax Bill Appeals for Cook County IL

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Over Reporting Your Income? IRS May Find Out And There Could Be Consequences.


Just read an interesting Tax Court opinion (Cadet, TC Summ. OP. 2015-39) about over reported income.  The taxpayer, who was called ‘a low income filer with very little count_moneywage income’, claimed a profit from a side-business of $17k from selling items at a flea market.  The taxpayer would have been paid $2,100 in self-employment tax, but the extra income would have resulted in about $8,000 total from the child tax credit plus an increased earned income credit.

Normally a tax return is first reviewed by the IRS computer system and, if needed, by reviewers.  In this case, the computers noted the ‘excessive’ income based on the taxpayer’s history and the computers froze the return.  During a review, the taxpayer couldn’t substantiate most of the profit (not enough deposits into bank accounts I’m guessing) so the IRS only allowed what was substantiated and only gave $700 in tax credits.

What’s interesting to me is I’ve  heard of the IRS computers looking for under reported income, but not over reported income.

alimony-iStock_with gavelSomething that wasn’t mentioned is if the IRS charged the taxpayer a civil penalty (usually $5,000) for filing a frivolous tax return – in my mind, it would have been warranted!  That’s the main penalty for filing a false return.

Kudos to the IRS for catching this.  We normally hear about cases of the IRS not catching false tax returns so good to hear a positive case.

 

Cheers!

Thomas C. Hodge, CPA
President

Hodge Group LLC
3943 N Austin Avenue

Chicago, IL  60634

773.237.6369

www.thehodgegroup.com

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