Anything you meant to do before Labor Day, but didn’t? Was one of those things checking your tax withholdings to avoid a nasty surprise when you file your 2016 tax returns? This year, more than before, it’s important to consider a mid-year tax withholding checkup.
Early tax filers who traditionally depend on getting their tax refunds early in the filing season could be disappointed in 2017. Several new factors implemented by the Internal Revenue Service to reduce identity theft and increase refund fraud protections could delay tax refunds, so it’s even more important than ever to perform a mid-year tax withholding checkup.
So what is changing?
- A new law effective in 2017 requires the IRS to hold refunds until at least February 15 for tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC). The IRS holds the entire refund to provide time to detect and prevent refund fraud, not just even the portion associated with the EITC and ACTC.
- The IRS and state tax administrators continue to strengthen identity theft and refund fraud protections which means some tax returns could face additional review time next year to protect against fraud.
As in the past, the IRS will begin accepting and processing tax returns once the filing season begins. The IRS says that in spite of the new law and steps to prevent refund fraud, most refunds will still be issued within the normal 21-day timeframe after being accepted for processing.
All these changes mean it’s even more essential to check on your tax withholding and plan ahead for next tax season. It’s your personal choice whether you want to have extra money withheld to get a bigger tax refund. It’s great to know how long you’ll have to wait for that big refund “pay day.”