It’s never too early to start preparing for tax season. The earlier you start, the more time you have and the less pressure you will feel when it finally comes time to do your taxes. This year it’s even more important because there are some additional things to be aware of.
If you think you will be entitled to a refund, get ready to wait a little longer for it. Tax refunds delays are expected due to a new law. A new federal law will delay tax refunds for thousands of middle and low-income tax payers who file in 2017. The Protecting Americans from Tax Hikes act of 2015 is to blame. According to section 201 of this act “no credit or refund for an overpayment for a taxable year shall be made to a taxpayer before February 15 if the taxpayer claimed the Earned Income Tax Credit or Additional Child Tax Credit on the return”. This law takes effect January 1, 2017.
The main reason for the delay is because the IRS is trying to reduce tax fraud and identity theft. The IRS will be holding the entire refund for taxpayers who claimed the Earned Income Tax credit or the Additional Child tax credit. The Agency has decided to focus its efforts on giving a second look to returns claiming these two tax credits.
In addition to refunds being delayed, tax payers who claimed these deductions should also be prepared to submit more documentation than usual to prove the validity of these tax breaks.
Though it’s for a good reason, these delays may cause hardship for some people who count on a refund to make ends meet. For those people it would be a good idea to start setting aside a small portion of your income now so that you’ll be prepared to handle any bills and expenses in the spring while waiting for a refund.