Given several new factors that could affect refunds in 2017, the Internal Revenue Service is encouraging taxpayers to give themselves a mid-season tax withholding checkup. Taking a closer look at the taxes that are being withheld, can help ensure that you’re withholding the right amount, either for tax refund purposes or to avoid unexpected tax bills next year. Here are a few quick insider tips.
“With these changes, it makes good sense on many different levels to check on your withholding and plan ahead for next tax season,” says IRS Commissioner John Koskinen. “It’s a personal choice if you want to have extra money withheld to get a bigger tax refund, but you have options available if you prefer to have a smaller refund next year and more take-home money now.”
By adjusting Form W-4, the Employee’s Withholding Allowance Certificate, you can ensure that the right amount is taken from your pay throughout the year so you don’t pay too much tax and don’t have to wait until you file your tax return to get a refund.
Refund Delays Expected for Some Taxpayers in 2017
The IRS has announced that some early tax filers claiming two key credits may not see their refunds until after February 15th. Beginning in 2017, a new law requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until mid-February. The change comes as a requirement by Congress in the Protecting Americans from Tax Hikes (PATH) Act, and the IRS must hold the entire refund – even the portion not associated with either of these credits – until at least February 15th. This helps ensure that you receive the refund you are owed by giving the IRS more time to detect and prevent fraud.
Although the IRS can’t issue refunds for some early filers until at least February 15th, most refunds will still be issued within 21 days or less, after being accepted for processing. “Although we still expect to issue most refunds within 21 days, we don’t want people caught by surprise if they get their refund a few weeks later than previous years,” says Koskinen.
Stronger Security Filters for Tax Refund Processing
The IRS and state tax administrators are also continuing to strengthen ID theft and fraud protection, meaning that some returns may face additional review. While they are working diligently to stop fraudulent refunds from being issued, the IRS is also focused on releasing legitimate refunds as quickly as possible.
The IRS, state tax agencies, and the private sector are continuing to work together to fight fraud through their Security Summit partnership and additional safeguards will be set in place for the upcoming 2017 season.
Again, the agency urges taxpayers to check their withholding now. Whether you prefer more earned money during the year or a large refund, checking your withholding will ensure you don’t receive an unexpected tax bill next year. Making those checks now will give you time to adjust your withholdings before the tax year ends in December.
Changes in Circumstances and Advance Premium Tax Credits
If you receive advance payments of the Premium Tax Credit under the Affordable Care Act made to your insurance company on your behalf, you should report life changes to your Marketplace. These “changes” include moving to a new address, or changes to your income or family size. Reporting these changes can help you avoid large differences between the advance credit payments and the amount of the premium tax credit allowed on your tax return – which may in turn affect your refund or balance due.
Making Withholding Adjustments
In most cases, a new Form W-4, Employee’s Withholding Allowance Certificate, is all you need to make an adjustment. Simply submit it to your employer, and they will use the form to figure the amount of federal income tax to be withheld from your pay.
To make things easier, the IRS offers several online resources to help bring your taxes closer to what is owed. These include:
If you’re self-employed, you can use the Form 1040-ES worksheet to correctly figure your estimated tax payments. If you also work for an employer, you can often forgo making these quarterly payments by instead having more tax taken out of your pay. Find out more on IRS.gov.
If you have questions about how much you should be withholding, we’re here to lend a hand. Be sure to browse our services page and fill out the form for a free consultation. Or give us a call at 844-841-9857!