Preview of tax season 2017: What to expect before filing your 2016 returns

AP Photo/Susan Walsh

This photo taken March 22, 2013 shows the exterior of the Internal Revenue Service building in Washington.

Why April 18?

April 15 falls on a Saturday, and this would usually move the filing deadline to the Monday, April 17. However, that is Emancipation Day — a legal holiday in Washington, D.C. — which pushes the nation’s filing deadline to Tuesday, April 18.

Trigger warning: The due date to file your 2016 federal income taxes is Tuesday, April 18. Just knowing that date is nearing can bring anxiety and dread for some people.

But fret not, Nevada taxpayers. No matter your consternation in the face of countdown clocks on websites of accountants, tax firms and sellers of tax software, the IRS is ready for you, and you have plenty of ways to get ready.

The IRS started accepting returns Jan. 23. That date was moved back half a week, in step with a series of calendar changes that are some of the more notable tweaks to tax rules this year.

The IRS also is deploying safeguards to combat identity theft and tax fraud, which may delay refunds, too.

“The IRS is paranoid about security, because there are so many new opportunities for fraud,” said Dennis Meservy, Las Vegas chapter president of the Nevada Society of CPAs, of the deadline changes and refund delays. “They’ve cut down fraud dramatically in the last couple of years, by like 50 percent. They’re trying to make it easier in the future, but this is the transition year for that.”

People with small businesses now must file their Form 1065s and K1s by March 15, a month earlier than in previous years — a change that could leave some partnerships and S-corporations facing penalties if they show up at their accountant’s office in mid-March thinking all is well.

“The world’s got to pay taxes to live,” Meservy said. “But no one wants to pay more than their fair share.”

You may be seeing the commercials — TurboTax, TaxSlayer, H&R Block or newcomer Credit Karma, among others. Even Wal-Mart offers tax help (in partnership with Jackson-Hewitt).

It’s enough to make filing your 1040 seem no more difficult than hosting a barbecue or greasing a squeaky garage door. But the explosion of tax-assistance options can leave some people unsure about which option is best for them.

Key date: Feb. 15

The IRS anticipates issuing more than 90 percent of refunds within 21 days. But a new law requires it to hold refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit until mid-February.

According to IRS data, almost 91 percent of all returns were filed electronically last year. Yet, about 60 percent of these digital returns were filed with the help of a tax professional.

The IRS offers free electronic tax filing to anyone earning less than $65,000 a year, but taxpayers have additional options if they’re seeking a little reassurance in their efforts keep things straight with Uncle Sam.

Tax Professionals

“I get a lot of clients who realize they need me after they’ve received an audit,” Meservy said.

The hired guns of taxable frontiers consist of CPAs and EAs — certified public accountants and enrolled agents — who face regulatory oversight and certification requirements for their titles.

Prices for their services vary depending on the preparer’s reputation and the client’s needs, but typically range from $100 to $300 for a basic 1040 with a Schedule A. Returns requiring a Schedule C can cost another $150 or so. Add another $600-$800 if you have a small business requiring 1065s, K1s and 1120s.

The average cost for a professionally prepared return in Nevada, according to the National Society of Accountants, is $273.

Barry Herr, former president of the Nevada Society of CPAs and adjunct professor at the College of Southern Nevada, says if you own a small business, you’ll want a CPA.

“I’m not only doing their taxes for them, I’m also helping their business as they go along, telling them things to consider — tax laws and deductions — that affect a business’s purchases and other operations,” Herr said.

Meservy agreed.

“If you have just a simple 1040, you might be OK on your own," he said. "But if you have a business, doing you your own tax return would be crazy.”

DIY Software and Online Services

The most popular tax software is Intuit’s TurboTax. It changed the game almost two decades ago by introducing a Q&A format that could walk filers through the most common tax forms and allow personal filing without using a finance professional.

Variations of TurboTax can cost $29-$149. Other popular software include TaxAct, Hewlett-Packard, TaxSlayer and Jackson-Hewitt Deluxe.

Many of these software products now also offer free versions of their software online for base-level filings.

“The freebie programs are fine for your basic personal returns,” Herr said. “But if you have your own business, or have other income, or retirement savings, or from something other than a W-2, you really want a CPA or an EA.”

Herr said taxes can get complicated quickly as typical life changes, such as buying a house, having a child, getting a divorce or taking on a new job that changes your retirement savings, enter the equation.

“That’s when you should start using someone like myself,” he said.

Check on your refund

“Where’s My Refund?” on IRS.gov and the IRS2Go phone app will be updated with projected deposit dates for early EITC and ACTC refund filers a few days after Feb. 15. Taxpayers will not see a refund date on “Where’s My Refund?” or through their software packages until then.

A new player in this space is Credit Karma — the advertising-driven credit-monitoring service — which announced in December the acquisition of AFJC Corp., purveyors of a user-focused tax software platform (as opposed to compliance-focused) for an undisclosed sum.

“If you’re using an online program, make sure it’s a well-known, reputable company,” Herr said. “If it’s wedotaxes.com that just opened up a P.O. Box in Las Vegas, maybe be a little more sensitive to that one before giving them all your personal information.”

Free In-person Support Services

About $11 million in refunds from 2012 expired and went unclaimed last year when the Nevada taxpayers to which the refunds were owed didn’t file returns.

Nevadans also left nearly $200 million in government coffers by not claiming available Earned Income and Additional Child Tax Credits.

Nevada ranks 47th in Earned Income Tax Credit participation, with more than 25 percent of qualifying families not claiming their credits — either because they are unaware of their eligibility or don’t file necessary forms.

“A lot of people don’t file their tax returns because they fear they can’t afford to pay what they owe,” said Pat Smith, director of Nevada Free Taxes Coalition. “Or they don’t think they make enough to have to file a return, but they could still get this credit if they file.”

NFTC helps low- and moderate-income filers to claim these funds.

NFTC is a nonprofit group that administers funds from the IRS’s Volunteer Income Tax Assistance, a grant-funded program allowing taxpayers who earned less than $55,000 in 2016 to claim tax credits ranging from $500 to more than $6,000, depending on their family situations.

“VITA is one of the most effective anti-poverty government programs out there,” Smith said. “We definitely want to make sure that anyone who’s eligible for this credit files their return and claims it.”

NFTC has about 175 IRS-certified volunteers, Smith said. The volunteers served about 8,000 Southern Nevada households last year, saving participants $1.4 million in tax preparation and filing fees while delivering $10.5 million in federal income tax refunds.

“If we can remove that barrier and assure them they’re getting their taxes done by IRS-certified volunteers who are looking to identify and help them claim any credits they are due, then that is going to make the taxpayer much more comfortable in filing their returns and staying tax-compliant,” Smith said.

Other free, in-person tax services are offered through Score Nevada, to help small businesses, and AARP, which offers free tax assistance for their qualifying members.

As for the future, President Donald Trump has promised a tax plan that would adjust rates for individuals and businesses alike, “but without a bill it’s too early to really know what they will be,” Meservy said.

So for now, to prepare for 2017, Herr, Smith and Meservy all offer the same advice: keep your receipts.

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