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Some families can't bank on a tax refund before Feb. 27

Posted on December 27, 2016 at 6:55 PM Comments comments (3)

Here's a new financial detour: Families on tight budgets need to hold the line when it comes to spending on after-holiday sales, if they typically plan to pay the extra bills with an early tax refund.

 

Don't bank on that strategy in 2017.

 

Taxpayers who receive the Earned Income Tax Credit or the Additional Child Tax Credit will face longer delays in 2017 and will not be able to access their refunds until the week of Feb. 27 at the earliest.

 

Initially, we heard reports about a switch that would delay those refunds until Feb. 15 but another 12 days has been added to that process, based on the latest reports.

 

Taxpayers who do not claim either of those credits would not be impacted by these delays.

 

As part of a strategy to tackle fraud, the Protecting Americans from Tax Hikes Act of 2015 — known as the PATH Act — put into place some extra hurdles when it comes to refunds associated with the Earned Income Tax Credit and the Additional Child Tax Credit to make it tougher for crooks to file fake returns using those credits to get a generous tax refund.

 

The new federal law says that tax refunds with these credits cannot be available before Feb. 15. No exceptions. But the delay will realistically stretch out to Feb. 27, according to tax experts.

 

The refunds will be released by IRS on Feb. 15. However, there is processing time involved in verifying account information with financial institutions, according to Marshall Hunt, certified public accountant and director of tax policy for the Accounting Aid Society's tax assistance program in metro Detroit.

 

On top of that, President's Day is on Feb 20 — a federal holiday — and the holiday plus weekends would mean that the earliest refunds for those with these credits would not hit bank accounts until the week of Feb. 27, Hunt said. He noted that the timing will be about the same if someone opts to have a check mailed.

 

For many lower-income people, we're talking about waiting longer for thousands of dollars.

 

The maximum amount of the Earned Income Tax Credit is $6,269 for those with three or more qualifying children. The top amounts drop to $3,373 for those with one qualifying child and up to $506 for those with no qualifying children in 2016.

 

The Earned Income Tax Credit is for people who are working but have limited incomes. To be eligible, one's total income for 2016 must not exceed $47,955 if single with three or more qualifying children or $53,505 if married filing jointly.

 

The income limit is $39,296 if single with one qualifying child or $44,846 if married filing jointly with one child.

 

The income limit is $14,880 if single — or $20,430 if married filing jointly — with no qualifying children.

 

The Additional Child Tax Credit may bring a tax refund even if a tax filer doesn't owe any tax. However, if you are able to claim the full amount of the Child Tax Credit, a maximum of $1,000 for each qualifying child in 2016, to offset income tax you will not be eligible for the Additional Child Tax Credit.

 

Cash-strapped consumers often file very early in the tax season to obtain sizable refund checks in early February to cover the rent or other bills.

 

Electronic filing of federal tax returns is expected to start Jan. 23.

 

It's important, of course, to not be tempted to fill the gap by falling for some offers for loan product — such as a loan on a tax refund that is based on a year-end pay stub.

 

Loan fees are costly and you could actually end up in the strange spot of being loaned more money than you receive for the tax refund. Why? Going on the last year's pay stub could lead to inaccurate information for calculating a tax refund. Regardless, the original loan must be repaid.

 

More W-2s to have a 16-digit code to fight tax fraud

 

See MichiganFreeTaxHelp.org for information about accessing free tax help.

 

If your income is below around $60,000 a year or so, you can do your own taxes for free on your own computer by going to www.MyFreeTaxes.com. H&R Block provides its software free of charge through MyFreeTaxes.com. That service begins in January.

 

Another early tip: If you used an Individual Taxpayer Identification Number in the past, make sure you find out whether that number expires as of Dec. 31. Processing delays are likely for filers with expired Individual Tax Identification Numbers. So you can renew your ITIN now if it expired and you plan to use it on a U.S. tax return. See www.irs.gov/ITIN.

 

An Individual Taxpayer Identification Number is used by someone who needs a taxpayer identification number but is not eligible for a Social Security number.

 

The IRS notes there are two reasons an ITIN would expire on Dec. 31. First, if you have not used your ITIN on a U.S. tax return at least once for tax years 2013, 2014 or 2015. Or second, if your ITIN has the two middle digits listed as 78 or 79.

 

Once you file a return, you can track the status of your federal tax refund online via www.irs.gov/refunds. You need a Social Security number or Individual Taxpayer Identification number, the exact amount of the refund and the filing status of the refund to use the IRS "Where's My Refund?" tool.

 

John Koskinen, Internal Revenue Service Commissioner, said in a media call in November that tax filers and tax professionals should still file the returns with the earned income credit and additional child tax credit early in the season.

 

“They should file as they normally do, so they don’t add to any delay already in the system,” Koskinen said.


Extension Filers: Don't Miss the Oct. 15 Deadline

Posted on October 14, 2015 at 6:20 PM Comments comments (0)

 

If you are one of the 13 million taxpayers who asked for more time to file your federal tax return and still haven’t filed, your extra time is about to expire. Oct. 15 is the last day to file for most people who requested an automatic six-month extension. If you have not yet filed, here are some things that you should know:

 

Try IRS Free File or e-file. You can still e-file your tax return for free through IRS Free File. The program is available only on IRS.gov through Oct. 15. IRS e-file is easy, safe and the most accurate way to file your taxes. The tax software you use to e-file helps you get all the tax benefits that you’re entitled to claim.

 

Use Direct Deposit. If you are due a refund, the fastest way to get it is to combine direct deposit and e-file. Direct deposit has a proven track record; eight in 10 taxpayers who get a refund choose it. The IRS issues more than nine out of 10 refunds in less than 21 days.

 

Use IRS Online Payment Options. If you owe taxes the best way to pay them is with IRS Direct Pay. It’s the simple, quick and free way to pay from your checking or savings account. You also have other online payment options. These include Electronic Funds Withdrawal or payment by debit or credit card. Just click on the “Payments” tab on the IRS.gov home page.

 

Don’t overlook tax benefits. Make sure to check if you qualify for tax breaks that you might miss if you rush to file. This includes the Earned Income Tax Credit and the Saver’s Credit. The American Opportunity Tax Credit and other education tax benefits can help you pay for college.

 

File on time. If you owe taxes, file on time to avoid a late filing penalty. If you owe and can’t pay all of your taxes, pay as much as you can to reduce interest and penalties for late payment. Use the Online Payment Agreement tool to ask for more time to pay. You can also file Form 9465, Installment Agreement Request, with your tax return.

 

More time for the military. Some people have more time to file. This includes members of the military and others serving in a combat zone. If this applies to you, you typically have until at least 180 days after you leave the combat zone to both file returns and pay any taxes due.

 

Try easy-to-use tools on IRS.gov. Use the EITC Assistant to see if you’re eligible for the credit. Use the Interactive Tax Assistant tool to get answers to common tax questions. The IRS Tax Map gives you a single point to get tax law information by subject. It integrates your topic with related tax forms, instructions and publications into one research tool.

 

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

 

Property tax freeze credit

Posted on October 2, 2014 at 12:35 AM Comments comments (0)

The property tax freeze credit is a new two-year tax relief program that reimburses qualifying New York State homeowners for increases in local property taxes on their primary residences.

 

Eligibility requirements for 2014

 

To receive the credit in 2014, homeowners must meet the following eligibility requirements:

 

Receive the STAR property tax exemption.

- The property must be the homeowner's primary residence.

- The total household income must be $500,000 or less.

 

The school district where the homeowner's property is located must comply with the New York State Property Tax Cap. Find out if your school district complied with the tax cap this year on our tax cap compliance page.

How to get the credit

 

In the Fall of 2014, the Tax Department will automatically mail checks to eligible homeowners. Eligible homeowners do not need to do anything to receive the credit. The Tax Department will review eligibility data and calculate the credit.

 

Homeowners who do not receive a check and who believe they are entitled to the credit (or who believe their credit was incorrectly calculated) will be able to contact the Tax Department to have their case reviewed.

 

Credit amounts

 

As a general rule, the freeze credit will fully reimburse eligible homeowners for increases to their property taxes. The freeze credit will be the greater of:

 

the actual increase in the homeowner's tax bill, or

the previous year's tax bill multiplied by an inflation factor (the lesser of 2% or inflation). For 2014, the inflation factor for school districts is 1.46%.

Homeowners whose tax bills go down, stay the same, or increase less than the inflation factor will receive a credit equal to the previous year's tax bill multiplied by the inflation factor.

 

Exceptions

 

There are some exceptions. The credit will not reimburse homeowners for increases that are the result of:

 

improvements to the property that increase its value,

changes in a property's exemption status, or

a jurisdiction-wide reassessment to the extent the increase in the property's assessed value exceeds the average change in assessed value.

 

Co-ops and mobile homes

 

The credit for co-ops and mobile homes that are not separately assessed will be calculated as follows:

 

Co-op owners: the credit will be 60% of the average credit for the jurisdiction.

Mobile home owners: the credit will be 25% of the average credit for the jurisdiction.

 

Buffalo, Rochester, Syracuse and Yonkers

 

Different rules apply in Buffalo, Rochester, Syracuse and Yonkers. These cities impose a single levy that includes both city and school district taxes. For purpose of the freeze credit, 67% of the tax is attributable to school tax and 33% attributable to city tax. In 2014, the credit will be equal to that part of the property tax increase attributable to school tax (67%).

 

New York City

 

New York City is not subject to the tax cap. For this reason, city residents are not eligible for this credit. New York City homeowners and renters may, however, be eligible for the New York City Circuit Breaker Tax Credit.

Family tax relief credit

Posted on October 2, 2014 at 12:30 AM Comments comments (0)

The family tax relief credit is a $350 payment to certain middle-income New Yorkers.

 

In the Fall of 2014, the Tax Department will automatically mail checks to eligible taxpayers. If you are eligible for the credit, you do not have to apply. If you think you are eligible, but do not receive a check, you will be able to have your case reviewed.

 

Eligibility requirements

 

You are entitled to this credit for 2014 if, on your 2012 return, you:

 

were a resident of New York State for the entire year,

claimed at least one child under age 17 as a dependent,

had New York State adjusted gross income (line 33 of your Form IT-201) between $40,000 and $300,000, and

had a New York State liability after credits that is zero or greater.

Family Enviroment

Posted on September 17, 2014 at 4:30 PM Comments comments (0)

We treat our clients like part of the family. We are small right now but with all of your help we can grow. So, look around our website and if you have any comments or questions, please feel free to let us know.


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