It's tax time: What to remember

  • By Ann Carrns,
  • The New York Times News Service
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Tax season officially opens next week, so it's time to get your documents organized if you haven't already.

The Internal Revenue Service will officially begin accepting individual returns on Monday. You can file earlier, however, if you're ready and have all the necessary forms, like the W-2 income statement from your employer. If you want yours to be among the nearly 155 million individual returns the I.R.S. receives this year, you can prepare it now using do-it-yourself software — or have it done by a professional tax preparer — and have the form sent automatically when the agency opens for business next week.

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While much attention has been paid to the federal tax overhaul, most provisions will not affect tax returns filed this year for 2017, said Lisa Greene-Lewis, a certified public accountant and tax expert with TurboTax.

There is at least one change, though, that tax filers may want to consider as they fill out forms this year. "Folks should take a close look at their medical expenses," said Melissa Labant, director of tax policy and advocacy with the Association of International Certified Professional Accountants.

The tax law expanded the availability of the deduction for medical expenses not just for 2018, but also for 2017. The deduction previously applied to medical expenses over 10 percent of adjusted gross income, but the law lowered the bar to 7.5 percent for those two years. (So if your adjusted gross income is $40,000, you can write off medical expenses over $3,000, rather than over $4,000.) But there is a catch: You must itemize to take the deduction. After 2018, the bar is scheduled to move back up to 10 percent.

The I.R.S. says it expects to issue most refunds within three weeks for electronically filed returns (refunds for paper returns can take several weeks longer). Last year, the average refund was just under $3,000.

But anti-fraud measures first put in place for last tax season will continue to affect the delivery of tax refunds for people who claim the earned-income tax credit or the additional child tax credit. By law, the I.R.S. can't issue refunds for such filers before mid-February. The agency said that it expected filers who claim those credits to receive refunds no earlier than Feb. 27, if they choose direct deposit and there are no other problems with their returns.

Many filers claiming those credits tend to file early because they depend on their tax refunds to pay off holiday credit-card debt or other bills. Nearly 70 percent of clients filing with the tax preparer Jackson Hewitt Tax Service in January and February of 2017 received at least one of those credits, according to the company.

In large part because of those delays, some tax preparation chains are offering no-fee, zero-interest advances of refunds. This year, for instance, Jackson Hewitt and H&R Block are promoting advances of up to $3,200 (in Jackson Hewitt's case) or $3,000 (H&R Block), depending on the size of the expected refund. The loan is repaid when the refund is received.

Focus on your finances

More on taxes, college savings, and other money matters.

The advances — often issued on a debit card — are generally safer than the notorious refund anticipation loans that such services offered in the past, which were often larded with high interest charges and fees, said Chi Chi Wu, a lawyer with the National Consumer Law Center. But, she cautioned, tax filers typically must have their returns prepared by the company to get the no-fee advance, and tax preparation fees vary widely. So it's sometimes hard to know if the package is a good deal. "Tax preparation fees are very opaque," she said.

Ms. Wu noted that there are free tax preparation services available for eligible filers through the I.R.S.'s Volunteer Income Tax Assistance program.

At least one online service, offered by Credit Karma, promotes a no-fee online tax preparation service as well as no-fee advances of up to $1,000.

Here are some questions and answers about tax season:

Q: When is the filing deadline this year?

A: Taxpayers have an extra two days to file this year. The federal deadline is Tuesday, April 17. The usual deadline, April 15, falls on a Sunday, and April 16 is a holiday in Washington, D.C.

Q: Why does my Form W-2 have a special code on it?

A: As part of an expanded test to reduce tax fraud and identity theft, the I.R.S. has assigned 16-character codes to some W-2 forms to help verify income data on electronically filed tax returns. If you see a code on your W-2, you'll be asked to include it on your return. (The code isn't used for returns filed on paper, according to the I.R.S.) The codes will appear on roughly a quarter of all W-2 forms, the agency said.

Q: How can I track my tax refund?

A: The I.R.S. recommends using its IRS2Go app for smartphones or its online refund tool to check the status of refunds. Filers claiming the earned-income credit or the additional child tax credit, however, won't see updates for projected refund dates before Feb. 17, the agency has said.

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