Taxes

Five Things to Remember About Exemptions and Dependents for Tax Year 2017

Most taxpayers can claim one personal exemption for themselves and, if married, one for their spouse. This helps reduce their taxable income on their 2017 tax return. They may also be able to claim an exemption for each of their dependents. Each exemption normally allows them to deduct $4,050 on their 2017 tax return. While each is worth the same amount, different rules apply to each type.

Here are five key points for taxpayers to keep in mind on exemptions and dependents when filing their 2017 tax return:

  1. Claiming Personal Exemptions.  On a joint return, taxpayers can claim one exemption for themselves and one for their spouse. If a married taxpayer files a separate return, they can only claim an exemption for their spouse if their spouse meets all of these requirements. The spouse:
  • Had no gross income.
  • Is not filing a tax return.
  • Was not the dependent of another taxpayer.
  1. Claiming Exemptions for Dependents.  A dependent is either a child or a relative who meets a set of tests. Taxpayers can normally claim an exemption for their dependents. Taxpayers should remember to list a Social Security number for each dependent on their tax return.
  2. Dependents Cannot Claim Exemption. If a taxpayer claims an exemption for their dependent, the dependent cannot claim a personal exemption on their own tax return. This is true even if the taxpayer does not claim the dependent’s exemption on their tax return.
  3. Dependents May Have to File a Tax Return. This depends on certain factors like total income, whether they are married, and if they owe certain taxes.
  4. Exemption Phase-Out.  Taxpayers earning above certain amounts will lose part or all the $4,050 exemption. These amounts differ based on the taxpayer’s filing status.

The IRS urges taxpayers to file electronically. The software will walk taxpayers through the steps of completing their return, making sure all the necessary information is included about dependents.  E-file options include free Volunteer Assistance, IRS Free File, commercial software and professional assistance.

Taxpayers can get questions about claiming dependents answered by using the Interactive Tax Assistant tool on IRS.gov. The ITA called Whom May I Claim as a Dependent will help taxpayers determine if they can claim someone on their return.

Feb 09, 2018 – IRS Funding Information

The IRS releases refunds each weekday throughout the year. We provide the percentage of refunds that have not yet been funded by the IRS. We update these funding statistics at approximately 2:00pm eastern each weekday throughout the year.

As of today, the estimated percentage of refunds not yet released by the IRS are:

– for returns filed 01/17 – 02/04, approximately 95% have not yet been released by the IRS.

– for returns filed 02/05 and beyond, the IRS has released very few refunds.

Feb 08, 2018 – IRS Funding Information
The IRS releases refunds each weekday throughout the year. We provide the percentage of refunds that have not yet been funded by the IRS. We update these funding statistics at approximately 2:00pm eastern each weekday throughout the year.

As of today, the estimated percentage of refunds not yet released by the IRS are:

– for returns filed 01/17 – 02/02, approximately 95% have not yet been released by the IRS.

– for returns filed 02/03 and beyond, the IRS has released very few refunds.

These Tax Credits Can Mean a Refund for Individual Taxpayers

Taxpayers who are not required to file a tax return may want to do so. They might be eligible for a tax refund and don’t even know it. Some taxpayers might qualify for a tax credit that can result in money in their pocket. Taxpayers need to file a 2017 tax return to claim these credits.

Here is information about four tax credits that can mean a refund for eligible taxpayers:

  • Earned Income Tax Credit. A taxpayer who worked and earned less than $53,930 last year could receive the EITC as a tax refund. They must qualify for the credit, and may do so with or without a qualifying child. They may be eligible for up to $6,318. Taxpayers can use the 2017 EITC Assistant tool to find out if they qualify.
  • Premium Tax Credit.Taxpayers who chose to have advance payments of the premium tax credit sent directly to their insurer during 2017 must file a federal tax return to reconcile any advance payments with the allowable premium tax credit. In addition, taxpayers who enrolled in health insurance through the Health Insurance Marketplace in 2017 and did not receive the benefit of advance credit payments may be eligible to claim the premium tax credit when they file. They can use the Interactive Tax Assistant to see if they qualify for this credit.
  • Additional Child Tax Credit. If a taxpayer has at least one child that qualifies for the Child Tax Credit, they might be eligible for the ACTC. This credit is for certain individuals who get less than the full amount of the child tax credit.
  • American Opportunity Tax Credit. To claim the AOTC, the taxpayer, their spouse or their dependent must have been a student who was enrolled at least half time for one academic period. The credit is available for four years of post-secondary education. It can be worth up to $2,500 per eligible student. Even if the taxpayer doesn’t owe any taxes, they may still qualify. They are required to have Form 1098-T, Tuition Statement, to be eligible for an education benefit. Students receive this form from the school they attended. There are exceptions for some students. Taxpayers should complete Form 8863, Education Credits, and file it with their tax return.

By law, the IRS is required to hold EITC and Additional Child Tax Credit refunds until mid-February — even the portion not associated with the EITC or ACTC.  The IRS expects the earliest of these refunds to be available in taxpayer bank accounts or debit cards starting February 27, 2018, if these taxpayers choose direct deposit and there are no other issues with their tax return.

Instructions for Forms 1040, 1040A or 1040EZ list income tax filing requirements. Taxpayers can also use the Interactive Tax Assistant tool on IRS.gov to answer many tax questions. They should look for “Do I need to file a return?” under general topics.

This tax tip covers information for tax year 2017 and is not affected by the Tax Cuts and Jobs Act of 2017. Most of the changes in this legislation take effect in 2018 and will affect the tax returns filed in 2019.

More Information:

IRS: Special Rules Help Many with Disabilities Qualify for Earned Income Tax Credit

IRS YouTube Videos: Claiming EITC or ACTC? Your Refund May Be DelayedEnglish | Spanish

WASHINGTON – The Internal Revenue Service wants taxpayers with disabilities and parents of children with disabilities to be aware of the Earned Income Tax Credit (EITC) and correctly claim it if they qualify.

The IRS says that many with disabilities miss out on this valuable credit because they do not file a tax return. EITC could put a refund of up to $6,318 into an eligible taxpayer’s pocket. Many people who do not claim the credit fall below the income threshold requiring them to file. Even so, the IRS urges them to consider filing anyway because the only way to receive this credit is to file a tax return and claim the EITC.

The EITC is a federal income tax credit for workers who earn $53,930 or less for 2017 and meet other eligibility requirements. Because it’s a refundable credit, those who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund.

To qualify for EITC, the taxpayer must have earned income. Usually, this means income either from a job or from self-employment. But taxpayers who retired on disability can also count as earned income any taxable benefits they receive under an employer’s disability retirement plan. These benefits remain earned income until the disability retiree reaches minimum retirement age. The IRS emphasized that Social Security benefits and Social Security Disability Income (SSDI) do not count as earned income.

Additionally, taxpayers may claim a child with a disability or a relative with a disability of any age to get the credit if the person meets all other EITC requirements. Use the EITC Assistant, on IRS.gov, available in English and Spanish, to determine eligibility and to estimate the amount of the credit.

People with disabilities are often concerned that a tax refund will impact their eligibility for one or more public benefits, including Social Security disability, Medicaid, and SNAP — the Supplemental Nutrition Assistance Program. The law is clear that tax refunds, including refunds from tax credits such as the EITC, are not counted as income for purposes of determining eligibility for such benefits. This applies to any federal program and any state or local program financed with federal funds.

The best way to get the EITC is to file electronically through a qualified tax professional, using free community tax help sites.

Many EITC filers will receive their refunds later this year than in past years. That’s because by federal law, the IRS cannot issue refunds for tax returns that claim the EITC or the Additional Child Tax Credit (ACTC) before mid-February. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting Feb. 27, 2018, if they chose direct deposit and there are no other issues with the tax return. Even so, taxpayers claiming the EITC or ACTC should file as soon as they have all the documents they need to prepare a complete and accurate return.

The IRS and partners nationwide will hold the annual EITC Awareness Day on Friday, Jan. 26, 2018, to alert millions of workers who may be missing out on this significant tax credit and other refundable credits. One easy way to support this outreach effort is by participating on the IRS Thunderclap to help promote EITC Awareness Day through social media. For more information on EITC and other refundable credits, visit the EITC page on IRS.gov.

GOVERNMENT SHUTDOWN; WHAT IT MEANS FOR YOU!

We have received an extensive amount of calls and concerns regarding the impact of the current U.S. Government Shutdown and want to share with you the immediate impact information we have received.

Numerous government agencies will be impaired since Congress failed to pass an operating spending bill.

There will be a mandatory furlough of non-essential governmental employees, so many government offices and services operations will be impacted. Many federal agencies and departments will be reduced to essential services only including the IRS.

Currently certain agencies will continue to operate, this includes the U.S. Postal Service, Social Security Administration, Veterans Administration, Medicare and Medicaid programs. This means that mail will continue delivery, Social Security checks will be disbursed, medical services will be provided for veterans and those receiving benefits of Medicare and Medicaid. The Transportation Security Administration will continue to operate but due to the mandatory furlough of non-essential government employees TSA may incur staff reductions that will impact air travel.

What this means for you and your taxes! All prevailing tax law remains in affect and all taxpayers remain obligated to meet all tax obligations as normal.

The IRS will need to continue processing activities to the extent necessary to protect government property and assets which includes the collection of tax revenue which maintains the integrity of the Federal tax collection process and will continue certain other authorized activities under the Anti-Deficiency Act.

Both individuals taxpayers and business taxpayers remain responsible for timely filing and timely payment of tax obligations including estimated tax payments, payroll taxes payments etc. No extensions apply due to the Federal Government Shutdown.

If you are subject to a Direct Debit Installment Agreement, know that the U.S. Department of the Treasury will continue those withdrawals on the specified dates of the prior agreement.

If you are subject to an Agreed Estimated Tax Payments Direct Debit, know also that the U.S. Department of the Treasury will continue those withdrawals on the specified dates.

Some significant delays you can expect due to IRS furlough of non-essential employees includes:

IRS tax refunds issuing will be delayed!

Scheduled IRS examinations, audits and appeals functions will recognize delays, but this does not mean that they will not transpire. Taxpayers subject to examination, audit or appeals actions remain obligated to stated compliance dates. If you have received an IRS Notice of pending action, please contact us immediately to resolve these issues. IRS offices, service centers and call centers will be shut down and not responding to taxpayer questions.

U.S. Tax Court has informed us that trials sessions currently scheduled for the week of January 22, 2018 will proceed at the scheduled trial locations. The Court expects that all trial locations will be accessible for use during the week of January 22nd. U.S. Tax Court anticipates continuing normal operations for as long as funding permits. They will provide us further guidance on the status of future scheduled trial dates.

The filing of your 2017 income tax returns remains subject to the current filing deadlines for all returns types. There will be no extension to the current filing deadlines. However, the IRS service centers will currently only be processing returns to the point of batching whether the returns are electronically filed or paper filed.

The filing of amended Form 1040X returns will be delayed.

If the Government Shutdown extends beyond five business days, the IRS will be reassessing mandatory activities and the impact of diminishment to non-essential activities and will provide us with further guidance we will share with you as soon as possible.

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National Association of Tax Professionals