IRS to Delay Tax Refunds for Low Income Taxpayers with Children until February15, 2017
ByRafique S. M. Ahmed
1.2 million tax professionalsacross the United Statesare gearing up for tax season which will commence on January 23, 2017 and last until April 18, 2017. Based on prior history, 153 million returnsare expected to be filed on Day One.
The IRS alsoannounced delay in certain refunds affected by PATH Act for taxpayers claimingEarned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC). The IRS plans to release these delayed refunds starting February 16, 2017.
The Internal Revenue Service has made some very significant changes in Business Tax Returns Due Dates effective 2017.
For taxable years beginning on or after January 1, 2016:
• C corporation (100) - The original due date of the return has been changed to the 15th day of the fourth month following the close of the taxable year. The extension period was also changed from seven months to six months.
• S corporation (100s) - The extension period was changed from seven months to six months.
• Partnership (565) - The original due date of the return was changed to the 15th day of the third month following the close of the taxable year.
• Limited Liability Company (568) - The original due date of the return for LLCs classified as partnerships and Single Member LLCs owned by pass-through entities (S Corporations, partnerships, and LLCs classified as partnerships) was changed to the 15th day of the third month following the close of the taxable year.
• Exempt Organizations (199) - The extension period was changed from seven months to six months.
Same-sex legally married couples are recognized as married when filing their 2016 Federal income tax return. The same-sex legally married couple will generally be required to file as married filing jointly or married filing separately. The ruling does not apply to registered domestic partners, civil unions, or other relationships recognized by state law. Same-sex couples are also allowed to amend the previously filed Federal tax returnsthat are still open under the statute of limitations, namely 2013 and 2014.
The following are the other significant changes in the tax landscape of 2016 which may affect your tax returns:
• IRS allows business related local lodging expenses meeting certain criteriaunder Sec. 162.
• IRS revises procedures for Innocent Spouse Relief making it fairer for victimized taxpayers facing a difficult situation.
• Form 1040NR, Nonresident Alien Income Tax Return can be e-filed this year.
• Foreign earned income maximum exclusion for 2016 increased to $101,300.
• Personal and Dependent Exemption amount increased to $4,050 and is subject to phase-out if income exceeds specified amounts.
• Under Section 179 Expense, taxpayer may choose to expense part of the cost of recovery property up to $500,000 for 2016.
• Social Security Tax will be computed at 6.2% up to a maximum wage limit of $118,500 and increases to $127,200 in 2017.
• Standard mileage rate forbusiness use of vehicle decreased to $.54 per mile. No change inrate for charitable use. However, the rate for medical care and moving of residence reduced to $.19 per mile.
• The Adoption Credit in 2016 has increased to $13,460 of total costs.
• The election to deduct state and local sales taxes instead of state and local income taxes is permanent.
• Tax-free IRA transfers directly to charities of up to $100,000 are extended if the taxpayer is 70 1/2 or older.
• Home Energy Improvements are extended for 2016 with a lifetime limit of $500.
• Tuition and Related Fees is extended for 2016.
• Employer Provided Transit and Parking Benefits are $255 per month in 2016.
• Research Credit for businesses has been permanently extended.
• There are two movie credits available through Form 3541, California Motion Picture and Television Credit, for the 2016 taxable year. A qualified taxpayer may claim either the original California Motion Picture Television Production Credit or the New California Motion Picture and Television Production credit or both.
(Rafique S.M. Ahmed is a professional Tax Accountant and has been providing accounting and tax services in California for more than thirty-five years. He is also an Authorized IRS Electronic Filing Provider. His office, Automated Tax & Financial Services, is located at 1109 Via Verde, San Dimas, California 91773. Rafique Ahmed can be reached at (909)599-1412 or(909)599-