Do you have everything you need before you file a federal tax return this year?
Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!
There are several changes that might require some up-front actions by you, so that you are ready to file your federal tax return this coming year. The IRS has provided a listing titled Get Ready on IRS.gov.
Reviewing this list now can help you avoid return processing delays or last minute scrambles for information you will need to prepare your return.
Number one on that list is Individual Taxpayer Identification Number (ITIN) renewal – for anyone who has not used it on a federal tax return at least once in the last three years. Additionally, all ITINs issued before 2013 will begin expiring January 1, 2017, starting with those with middle digits of 78 and 79 (Example: (9XX-78-XXXX). All expired ITINs must be renewed before being used on a U.S. tax return. This year, there are also new documentation requirements when applying for or renewing an ITIN for certain dependents – so be sure to read those before applying. This process can take seven weeks if you qualify for an ITIN and your application is complete. If your information is not complete, it can take longer, so start the process now of applying for or renewing an ITIN.
Others changes are that some taxpayers:
- Need their adjusted gross income from their 2015 tax return to validate their electronically filed tax return,
- Will not get their refund until after February 15 if they claim the Earned Income Tax Credit or the Additional Child Tax Credit (Note: you can see more information on this change in our Important News: Some 2016 refunds won’t be released until after February 15 article),
- Can register for Secure Access and use certain online self-help tools, and
- Must call to make an appointment for services offered at the IRS Taxpayer Assistance Center locations.
Life events can also make a big difference in taxes and healthcare, so remember to account for all life events that could affect your tax liability.
Any of these events during 2016 may affect the taxes you owe:
- Birth of a child or a child turning age 17,
- Marriage, divorce or separation,
- Career or job changes, unemployment or furlough,
- Planning for retirement,
- Withdrawal from the Thrift Savings Plan or a 401(k),
- Natural disasters,
- Moving or home ownership, and
- Foreclosure, debt forgiveness or bankruptcy.
The Individual Shared Responsibility Provision of the Affordable Care Act requires you, your spouse and your dependents to report qualifying health insurance for the entire year. If not, you need to be able to claim a health coverage exemption or report an individual shared responsibility payment when you file. In addition, you may be eligible for the premium tax credit if you purchased health coverage through the Health Insurance Marketplace.
Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York. He provides guidance and strategies to improve clients’ financial well-being.