In December, the IRS announced tax season will start Monday, Jan. 23, 2017, and will begin accepting electronic tax returns that day. More than 153 million individual tax returns are expected to be filed in 2017.
As a result of the sheer volume of returns and several other factors, the IRS reminded taxpayers claiming certain tax credits to expect a longer wait for refunds. The IRS still anticipates issuing more than nine out of 10 refunds in less than 21 days, but there are some important factors that the IRS recommends keeping in mind for taxpayers.
- Choosing e-file and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund.
- Beginning in 2017, a new law requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until mid-February. Under the change required by Congress in the Protecting Americans from Tax Hikes (PATH) Act, the IRS must hold the entire refund, even the portion not associated with the EITC and ACTC, until at least Feb. 15. This change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent fraud. As in past years, the IRS will begin accepting and processing tax returns once the filing season begins. All taxpayers should file as usual, and tax return preparers should also submit returns as they normally do – including returns claiming EITC and ACTC.
- The IRS will begin releasing EITC and ACTC refunds starting Feb. 15. However, the IRS cautions taxpayers that these refunds likely won’t arrive in bank accounts, or on debit cards, until the week of Feb. 27, assuming there are no processing issues with the tax return and the taxpayer chose direct deposit. This additional period is due to several factors, including banking and financial systems needing time to process deposits.
- After refunds leave the IRS, it takes additional time for them to be processed and for financial institutions to accept and deposit the refunds to bank accounts. The IRS reminds taxpayers that many financial institutions do not process payments on weekends or holidays, which can affect when refunds reach taxpayers. For EITC and ACTC filers, the three-day holiday weekend involving President’s Day may affect their refund timing.
On Jan. 6, the IRS recommended that tax professionals use the updated Publication 2043, IRS Refund Information Guidelines for the Tax Preparation Community, to advise clients who are expecting refunds. The update includes information detailing why IRS is required to put a hold on refunds claiming the EITC and the ACTC. The agency will begin to release EITC/ACTC refunds starting Feb. 15. The IRS noted that these refunds likely will not reach taxpayers until the week of Feb. 27.
Stay tuned to the Intuit® ProConnect™ Tax Pro Center for continuous updates.