2017 Income Tax Filing Season

by Barry L Weller, EA

The IRS and most states will open tax filing for your 2016 income tax returns on January 23, 2017.  The deadline for filing a return is Tuesday, April 18, 2017.  The deadline is extended because April 15th falls on a Sunday and Emancipation Day, a holiday in Washington, D.C., will be observed on Monday, April 17th, thereby pushing the nation’s filing deadline to April 18th. 

Some Refunds May Be Delayed This Year
Some important changes this year involves refunds.  The PATH Act is a federal law that was enacted in 2015 and beginning this tax season (2016 personal income tax returns being filed in 2017) requires the IRS not release certain refunds before mid-February.  The IRS will begin releasing refunds on February 15th for individuals claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC).  The IRS must hold the entire refund, not just a portion of the refund attributed to the credits.  The IRS is cautioning taxpayers that these refunds likely will not start arriving in bank accounts or on debit cards until the week of February 27th since it will take time for these refunds to be processed and for financial institutions to accept and deposit the refunds to bank accounts.  Also, the three-day holiday weekend involving President’s Day may affect the timing of refunds.
Why the Delay?  The delay is designed to give the IRS more time to screen the returns for fraud. The IRS estimates that it issued $3.1 billion in fraudulent tax refunds to identity thieves in 2014 and $5.8 billion in fraudulent refunds in 2015.  When a tax return is received by the IRS, their normal processing time to issue refunds in less than 21 days. 

Requirements For Filing a 2016 Income Tax Return
The rules for filing a Pennsylvania income tax return and a federal income tax return are different.

Pennsylvania Income Tax Returns…
Every Pennsylvania resident, part-year resident or nonresident individual earning, receiving or realizing more than $33 in gross Pennsylvania income is required to file a Pennsylvania income tax return even if no tax is due with the return. Pennsylvania income tax law does not exempt a minor from the above requirements even if the minor is claimed as a dependent on someone else’s federal income tax return nor does PA income tax law allow for any personal exemption or standard deduction. For some taxpayers who are not a dependent of another person, PA income tax law does have a tax forgiveness provision which is a credit for some or all of an eligible taxpayer’s tax liability whose poverty income does not exceed certain eligibility amounts.  Every resident, part-year resident and nonresident realizing a gain, profit or loss in a business, profession or farm with Pennsylvania source income is required to file a PA income tax return. You are also required to file a Pennsylvania income tax return if you had PA taxable income or loss from the sale, exchange or disposition of property, or if you received rents, royalties. Lastly, you are required to file a PA income tax return if you realized income or loss from a Pennsylvania partnership, S-corporation, estate or trust.

Federal Income Tax Returns…
The federal rules for filing a tax return are much different. For single individuals, you must file a tax return with the IRS if your gross income was at least $10,350. But if you are age 65 or older, your gross income must be at least $11,900 before you must file a return. For married taxpayers choosing to file jointly, you must file a federal income tax return when your gross income is at least $20,700. If however, married taxpayers choose to file separately, you must file a return when your income is $4,050 or greater. Lastly, if your status is head of household or qualifying widow(er), you must file a return when your gross income is $13,350 and $16,650 respectively.

There are some exceptions to the above rules. You must file a return in the following situations.

(1) Children who are claimed as dependents on someone else’s return but have unearned income of more than $1,050 or earned income of more than $6,300
(2) You owe any special taxes including alternative minimum tax, additional tax on a qualified plans, household employment tax, Social Security and Medicare tax on tips you did not report to your employer, recapture taxes including recapture of the first-time homebuyer credit
(3) You received any advance earned income credit from your employer
(4) You had net earnings from self-employment of at least $400
(5) You received form 1095-A
(6) You received advanced payments of the premium tax credit for you, your spouse or dependent(s) thru the Health Insurance Marketplace.

If you are not required to file a return, but had federal income tax withholding or are eligible for a refund, you must file a tax return to claim your refund.

Health Insurance Requirements
Again this year, the Affordable Care Act requires that a taxpayer and each member of their household had qualifying health coverage for each month of 2016 or an exemption from coverage.  If not, they will be required to make an individual shared responsibility payment when filing their tax returns.  For 2016, the penalty is the greater of $695 per uninsured adult and $347.50 per uninsured child (up to a maximum of $2,085 per household), or 2.5% of household income above the tax filing threshold whichever is greater.

Barry L Weller, EA is the president of Barry Weller & Associates with offices at 216 E Philadelphia Ave, Boyertown, PA 19512   Phone (610) 367-8280   He is an enrolled agent, licensed to represent taxpayers before the IRS.

Revised 1/16/2017