Tag Archives: IRS News Release

IRS Tax Tip: Adoption Credit

Adoption Tax Credit Facts to Consider

Taxpayers who have adopted or tried to adopt a child in 2016 may qualify for a tax credit. Here are ten important things about the adoption credit:

  1. The Credit. The credit is nonrefundable, which may reduce taxes owed to zero. If the credit exceeds the tax owed, there is no refund of the additional amount. In addition, if an employer helped pay for the adoption through a written qualified adoption assistance program, that amount may reduce any taxes owed.
  2. Maximum Benefit. The maximum adoption tax credit and exclusion for 2016 is $13,460 per child.
  3. Credit Carryover. If the credit exceeds the tax owed, taxpayers can carry any unused credit forward. For example, the unused credit in 2016 can reduce taxes for 2017. Use this method for up to five years or until the credit is fully used, whichever comes first.
  4. Eligible Child. An eligible child is an individual under age 18 or a person who is physically or mentally unable to care for themselves.
  5. Qualified Expenses. Adoption expenses must be reasonable, necessary and directly related to the adoption of the child. Types of expenses may include adoption fees, court costs, attorney fees and travel.
  6. Domestic or Foreign Adoptions. Taxpayers can usually claim the credit whether the adoption is domestic or foreign. However, there are different rules regarding the timing of expenses for each type of adoption.
  7. Special Needs Child. A special rule may apply if the adoption is of an eligible U.S. child with special needs. Under this special rule, taxpayers can claim the tax credit, even if qualified adoption expenses were not paid.
  8. No Double Benefit. In some instances both the tax credit and the exclusion may be claimed but not for the same expenses.
  9. Income Limits. The credit and exclusion are subject to income limitations. These may reduce or eliminate the claimable amount..

IRS Tax Tip: IRS Can Help Taxpayers Get Form W-2

IRS Can Help Taxpayers Get Form W-2

Most taxpayers got their W-2 Forms by the end of January. Form W-2, Wage and Tax Statement, shows the income and taxes withheld from an employee’s pay for the year. Taxpayers need it to file an accurate tax return.

If a taxpayer hasn’t received their form by mid-February, here’s what they should do:

  • Contact their Employer. Taxpayers should ask their employer (or former employer) for a copy of their W-2. Be sure the employer has the correct address.
  • Call the IRS. If a taxpayer is unable to get a copy from their employer, they may call the IRS after Feb. 27. The IRS will send a letter to the employer on the taxpayer’s behalf. The taxpayer will need the following when they call:
    • Their name, address, Social Security number and phone number;
    • Their employer’s name, address and phone number;
    • The dates they worked for the employer; and
    • An estimate of their wages and federal income tax withheld in 2016. Use a final pay stub for these amounts.
  • File on Time. Taxpayers should file their tax return by April 18, 2017. If they still haven’t received their W-2, they should use Form 4852, Substitute for Form W-2, Wage and Tax Statement. They should estimate their wages and taxes withheld as best as possible. To request more time to file, use Form 4868, Application for Automatic Extension of Time to File. Taxpayers can also e-file a request for more time. Do it for free using IRS Free File. However, remember, an extension of time to file your return is not an extension of time to pay taxes owed.
  • Correct a Tax Return if Necessary. Taxpayers may need to correct their tax return if they get a missing W-2 after they file. If the tax information on the W-2 is different from what they originally reported, they may need to file an amended tax return. Use Form 1040X, Amended U.S. Individual Income Tax Return, to make the change.

All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

IRS E-News Special Edition “Where’s My Refund Information”

Where’s My Refund? will be updated on Feb. 18 for the vast majority of early filers who claimed the Earned Income Tax Credit or the Additional Child Tax Credit. Before Feb. 18, some taxpayers may see a projected deposit date or an intermittent message that the IRS is processing their return.

By law, the IRS is required to hold EITC and ACTC refunds until Feb. 15. However, taxpayers may not see those refunds until the week of Feb. 27. Due to differing timeframes with financial institutions, weekends and the Presidents Day holiday, these refunds likely will not start arriving in bank accounts or on debit cards until the week of Feb. 27 — if there are no processing issues with the tax return and the taxpayer chose direct deposit

 

Reminder:  We DO NOT have access to refund information.

IRS News Essentials: Create Strong Passwords

Safeguarding Taxpayer Data: Create Strong Passwords

Passwords are often the key to the identification and authentication process for access to your computer, email and encrypted information, both received and transmitted. For this reason, it is critical to your business and the security of your client data that you have strong passwords and that you protect those passwords.

Here are some things you should consider in creating and protecting passwords:

  • Longer passwords are safe and more difficult to guess. A strong password should be a minimum of eight characters. It should include a combination of letters, numbers and symbols or special characters. Your password should include at least one uppercase letter, one lowercase letter, one number and one symbol or character.
  • Personal information should not be included in your passwords.  Names of siblings, children, pets, etc., are generally available on social media, which makes it easier for cybercriminals to figure out your password.
  • Avoid using the same password for all of your information systems, accounts or devices. If someone does guess one password, they will not have access to all your systems, devices or data.
  • Substitute numbers and symbols for letters in words or phrases to make it more difficult to guess a password.

Do not share your password and be careful of attempts to trick you into revealing your password.

IRS News Essentials: Monitor your EFIN

Safeguarding Taxpayer Data: Monitor Your EFIN for Suspicious Activity

Identity thieves increasingly target tax professionals. A thief who breaches the data of one tax return preparer can gain hundreds or thousands of taxpayers’ data. One way you can monitor for suspicious activity is to check how many federal tax returns have been filed with your Electronic Filing Identification Number (EFIN).

As part of the ongoing concerns about security and identity theft, the IRS recommends that you verify the number of returns submitted under your EFIN. Do this routinely and especially during filing season.

Verify your EFIN through IRS e-Services. If you do not have an e-Services account, then your first step would be to go to e-Services and register for an account.

Once you have logged into your e-Services account, follow these steps to verify the number of returns electronically filed with the IRS:

  1. Select your name,
  2. In the left banner, select ‘Application’,
  3. In the left banner, select ‘e-File Application’,
  4. Select your name again,
  5. In the listing, select ‘EFIN Status’ and on this screen you can see the number of returns filed based on return type.

Help safeguard your EFIN. During the filing season, check on your EFIN status to ensure that it is not being used by others. Your e-Services account will give you the number of returns the IRS received, which you can match to your records. The statistics are updated weekly. Please contact the IRS e-help Desk at 866-255-0654 if you see a significantly higher volume than you transmitted.

IRS News Essentials: IRS Warn of Refund Delays

IRS and Partners Look to Start of 2017 Tax Season; Encourage use of IRS.gov and e-File; Warn of Refund Delays

IRS YouTube Videos
When Will I Get My Refund:
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Claiming EITC or ACTC? Your Refund May Be Delayed:
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WASHINGTON — The Internal Revenue Service and partners from the states and tax industry today reminded taxpayers that the nation’s 2017 individual income tax filing season opens Jan. 23.

The IRS expects more than 153 million tax returns to be filed this year and taxpayers have until Tuesday, April 18, 2017, to file their 2016 tax returns and pay any tax due. The deadline is extended because the Emancipation Day, a holiday in Washington, D.C., will be observed on Monday, April 17, pushing the nation’s filing deadline to April 18.

“There are a number of important changes this year involving refunds and tax law changes that we encourage people to keep in mind,” said IRS Commissioner John Koskinen. “We encourage taxpayers to plan ahead and take a few minutes to review these changes. As we enter the filing season, taxpayers should know that the dedicated workforce of the IRS and the nation’s tax community stand ready to help.”

Taxpayers that are e-filing can still submit returns to their software provider before Jan. 23. They will hold the return and transmit it to the IRS when the systems open. The IRS also reminds taxpayers that they don’t have to wait until Jan. 23 to contact their tax professional.

In 2016, the IRS issued 111 million individual tax refunds and expects more than 70 percent of taxpayers to receive a refund in 2017. Also, the IRS reminds taxpayers that a new law requires the IRS to hold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until Feb. 15. “We encourage taxpayers to file as they normally would, including returns claiming the EITC or ACTC” Koskinen said. “The IRS and the nation’s tax community are committed to making this another smooth filing season.”

IRS News Essentials: Secure your Office/Site

Safeguarding Taxpayer Data – Secure Your Office

Tax professionals can help protect taxpayer data by looking around their own offices. It’s more important than ever that tax professionals take aggressive steps to protect taxpayer information. Securing office space is as important as securing computers.

In assessing how secure your office is, consider these questions:

  • Are all the places where taxpayer information is located protected from unauthorized access and potential danger such as theft, flood and tornado?
  • Do you have written procedures that prevent unauthorized access and unauthorized processes?
  • Do you leave taxpayer information, including data on hardware and media, unsecured? Check on desks, photocopiers, mailboxes, vehicles and trashcans. What about in rooms in the office or at home where unauthorized access could occur?
  • Who authorizes and/or controls delivery and removal of taxpayer information, including data on hardware and media?
  • Are the doors to file rooms and/or computer rooms locked?
  • Do you provide secure disposal of taxpayer information? Do you use items such as shredders, burn boxes or secure temporary file areas for information until it can be properly disposed?

The answers can be very important to protecting your clients and your business. To learn more about how to protect both, review Publication 4557, Safeguarding Taxpayer Data.

This is one in a series of special security awareness tax tips for tax professionals. The “Protect Your Clients; Protect Yourself” campaign’s goal is to raise awareness among tax professionals. It is an initiative of the Security Summit, a joint project by the IRS, states and the tax community to combat identity theft. Because of the sensitive client data held by tax professionals, cybercriminals increasingly are targeting the tax preparation community.

IRS News Essentials: Safeguarding Taxpayer Data

Safeguarding Taxpayer Data – How to Get Started

Tax professionals must safeguard taxpayer data by law. It is also critical to tax preparers’ business success. Protect your clients and yourself by taking a few common sense steps.

You can seek advice from security consultants or insurance companies. IRS Publication 4557, Safeguarding Taxpayer Data, also offers tips on how to get started.

These best practices include:

  • Take responsibility yourself or assign someone to be responsible for safeguards;
  • Assess the risks to taxpayer information in your office. Make sure to include your operations, physical environment, computer systems and employees, if applicable;
  • Make a list of the locations where you keep taxpayer information (computers, filing cabinets, and containers taxpayers may bring you);
  • Write a plan of how to safeguard taxpayer information. Put appropriate safeguards in place;
  • Use service providers who have policies to maintain an adequate level of information protection; and
  • Monitor, evaluate and adjust your security program as your business or circumstances change.

To safeguard taxpayer information, determine the appropriate security controls for your environment based on the size, complexity, nature and scope of your activities. Security controls are the management, operational and technical safeguards you may use to protect the confidentiality, integrity and availability of your customers’ information.

Examples of security controls include:

  • Locking doors to restrict access to paper or electronic files
  • Requiring passwords to restrict access to computer files
  • Encrypting electronically stored taxpayer data
  • Keeping a backup of electronic data for recovery purposes
  • Shredding paper containing taxpayer information
  • Removing sensitive or personal information before mailing items

This is one in a series of special security awareness tax tips for tax professionals. The “Protect Your Clients; Protect Yourself” campaign’s goal is to raise awareness among tax professionals. It is an initiative of the Security Summit, a joint project by the IRS, states and the tax community to combat identity theft. Because of the sensitive client data held by tax professionals, cybercriminals increasingly are targeting the tax preparation community.

IRS News Essentials: IRS, Partners Add New Safeguard for 2017

IRS, Partners Add New Safeguard for 2017; Ask for Your Help to Combat Identity Theft

Building on the successes of last year, the IRS, state tax agencies and the tax industry are enacting a series of new initiatives for 2017. These initiatives will better protect you from identity theft and refund fraud. However, we need your help. Everyone has a role to play in protecting data.

In the tax community, we’ve been working together since 2015 to put in place improved safeguards. These safeguards make it harder for identity thieves to file fraudulent returns successfully. That means identity thieves try to steal even more data to impersonate taxpayers.

Many of the changes will be invisible to taxpayers but will be invaluable to helping keep you safer from identity thieves. Our focus is on “trusted customer” features that help us authenticate both the taxpayer and tax return. Here are a few things we’re doing for 2017:

  • Sharing new data elements from tax returns. This helps us validate the return and the taxpayer. These elements include items such as the time it takes to complete the return. This helps us guard against mechanized computer fraud.
  • Sharing new data elements from business tax returns. This extends more identity theft protections to business filers as well as individuals.
  • Creating a new program between states and the financial industry. This allows banks and others to flag suspicious refunds.
  • Expanding the Form W-2 Verification Code initiative.  This initiative, started by the IRS last year, expands to 50 million forms in 2017 from 2 million in 2016. When completing a tax return, users enter a 16-digit verification code when prompted by the tax software. Both individuals and tax professionals use this code to validate the information on the Form W-2. The IRS anticipates in future years that the initiative will impact all Forms W-2.
  • Continuing to enhance software password requirements for individuals and tax professional users. This provides additional safety prior to filing.

You also can take steps to protect yourself from identity thieves by taking a few simple precautions to protect your data and your identity.

  • Never routinely carry your Social Security Administration card or any document that includes your Social Security number.
  • Always use anti-malware security software on all your digital devices, computer, tablet and mobile phone.
  • Avoid phishing scams that will either trick you into disclosing your passwords or SSN by posing as companies or agencies. Neither the IRS nor your tax software provider will ask you to update your accounts by providing you an email with links.
  • Always use strong passwords that are long and complex. For example, use a mixture of letters, numbers and special characters and do not use the same password for multiple accounts.

Protecting your data is a job we take very seriously, but we need you to join us. That’s why we launched the Taxes. Security. Together. campaign for taxpayers and the Protect Clients; Protect Yourself campaign for tax professionals. Learn what additional steps you can take. We need your help.

IRS News Essentials: 2017 Filing Season

Issue Number:    IR-2016-167

Inside This Issue

2017 Tax Filing Season Begins Jan. 23 for Nation’s Taxpayers, Tax Returns due April 18


WASHINGTON ― The Internal Revenue Service announced today that the nation’s tax season will begin Monday, Jan. 23, 2017 and reminded taxpayers claiming certain tax credits to expect a longer wait for refunds.

The IRS will begin accepting electronic tax returns that day, with more than 153 million individual tax returns expected to be filed in 2017. The IRS again expects more than four out of five tax returns will be prepared electronically using tax return preparation software.

Many software companies and tax professionals will be accepting tax returns before Jan. 23 and then will submit the returns when IRS systems open. The IRS will begin processing paper tax returns at the same time. There is no advantage to filing tax returns on paper in early January instead of waiting for the IRS to begin accepting e-filed returns.

The IRS reminds taxpayers that a new law requires the IRS to hold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until Feb. 15. In addition, the IRS wants taxpayers to be aware it will take several days for these refunds to be released and processed through financial institutions. Factoring in weekends and the President’s Day holiday, the IRS cautions that many affected taxpayers may not have actual access to their refunds until the week of Feb. 27.

“For this tax season, it’s more important than ever for taxpayers to plan ahead,” IRS Commissioner John Koskinen said. “People should make sure they have their year-end tax statements in hand, and we encourage people to file as they normally would, including those claiming the credits affected by the refund delay. 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.”

The IRS also reminds taxpayers that they should keep copies of their prior-year tax returns for at least three years. Taxpayers who are changing tax software products this filing season will need their adjusted gross income from their 2015 tax return in order to file electronically. The Electronic Filing Pin is no longer an option. Taxpayers can visit IRS.Gov/GetReady for more tips on preparing to file their 2016 tax return.

April 18 Filing Deadline

The filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017, rather than the traditional April 15 date. In 2017, April 15 falls on a Saturday, and this would usually move the filing deadline to the following Monday – April 17. However, Emancipation Day – a legal holiday in the District of Columbia – will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 18, 2017. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.

“The opening of filing season reflects months and months of work by IRS employees,” Koskinen said. “This year, we had a number of important legislative changes to program into our systems, including the EITC refund date, as well as dealing with resource limitations. Our systems require extensive programming and testing beforehand to ensure we’re ready to accept and process more than 150 million returns.”

The IRS also has been working with the tax industry and state revenue departments as part of the Security Summit initiative to continue strengthening processing systems to protect taxpayers from identity theft and refund fraud. A number of new provisions are being added in 2017 to expand progress made during the past year.

Refunds in 2017

Choosing e-file and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund.

The IRS still anticipates issuing more than nine out of 10 refunds in less than 21 days, but there are some important factors to keep in mind for taxpayers.

Beginning in 2017, a new law requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit until mid-February. Under the change required by Congress in the Protecting Americans from Tax Hikes (PATH) Act, the IRS must hold the entire refund — even the portion not associated with the EITC and ACTC — until at least Feb. 15. This change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent fraud.

As in past years, the IRS will begin accepting and processing tax returns once the filing season begins. All taxpayers should file as usual, and tax return preparers should also submit returns as they normally do – including returns claiming EITC and ACTC.

The IRS will begin releasing EITC and ACTC refunds starting Feb. 15. However, the IRS cautions taxpayers that these refunds likely won’t arrive in bank accounts or on debit cards until the week of Feb. 27 (assuming there are no processing issues with the tax return and the taxpayer chose direct deposit). This additional period is due to several factors, including banking and financial systems needing time to process deposits.

After refunds leave the IRS, it takes additional time for them to be processed and for financial institutions to accept and deposit the refunds to bank accounts and products. The IRS reminds taxpayers many financial institutions do not process payments on weekends or holidays, which can affect when refunds reach taxpayers. For EITC and ACTC filers, the three-day holiday weekend involving President’s Day may affect their refund timing.

Where’s My Refund? ‎on IRS.gov and the IRS2Go phone app will be updated with projected deposit dates for early EITC and ACTC refund filers a few days after Feb. 15. Taxpayers will not see a refund date on Where’s My Refund? ‎or through their software packages until then. The IRS, tax preparers and tax software will not have additional information on refund dates, so Where’s My Refund? remains the best way to check the status of a refund.