The Internal Revenue Service said Thursday it expects to hold tax refunds for taxpayers this year claiming the earned income tax credit and the additional child tax credit until Feb. 15 to give the agency more time to detect fraud.
The refunds likely won't arrive on taxpayers' bank accounts until the week of Feb. 27. "We encourage taxpayers to file as they normally would, including returns claiming the EITC or ACTC,” IRS Commissioner John Koskinen said in a statement. The change was prompted by the Protecting Americans from Tax Hikes (PATH) Act.
In a press conference Thursday to announce the start of the 2017 tax filing season, which begins on Jan. 23, the IRS said it expects more than 153 million tax returns this year.
Jamie Hopkins, professor at The American College for Financial Services, shares 5 common mistakes made during tax season and how to avoid them.
More than 70% of taxpayers will receive a refund in 2017, with 90% or more of refunds issued in fewer than 21 days after returns are submitted, the IRS estimated. In 2016, 111 million individual tax refunds were issued.
The deadline to file 2016 returns and pay any tax due is April 18, as the traditional April 15 deadline falls on Saturday this year and the Emancipation Day, a holiday in Washington, D.C., is observed on April 17.
More than 80% of tax returns are expected to be filed electronically, which prompts the IRS to issue refunds via direct deposit. The average refund was $2,857 last year, and the agency expects refunds "to be in that ballpark again this year," Koskinen said.
Other things to note for the upcoming tax filing season:
E-filers can submit early. Taxpayers who e-file can submit their returns to their software provider before Jan. 23. But the software companies will not send them to the IRS until Jan. 23. The IRS Free File program, a partnership with tax prep companies, offers free federal and state return software to about 100 million individuals and families with incomes of $64,000 or less. The IRS says 70% of the nation’s taxpayers are eligible for the program. It's available on IRS.gov.
Tips for Obamacare consumers. The Affordable Care Act, better known as Obamacare, mandates Americans -- unless they're qualified for an exemption -- to carry health insurance coverage or pay a penalty when filing their tax returns. The IRS says most taxpayers simply need to check a box to verify that they have insurance. For others with more complex answers, the agency offers tips on IRS.gov/aca.