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Things to Know When Filing Your Tax Return This Year

January 27, 2016  |   Tax Advice,Tax Tips   |   Tags: , , , ,  

Taxpayers should expect various tax rule updates this year, and important changes made by the IRS. There has been a hike in Affordable Care Act penalties, and reporting requirements are mandatory for those holding foreign financial assets valued at $50,000 or more.

In order to remain compliant with current tax rules and avoid running into any problems, taxpayers may review the following filing facts, as shared by Time:

“1. Tax Accountants Get Swamped Closer to Tax Season

“The earlier you start collecting documents and figuring out how you are going to file your taxes, the better. Many accountants might find themselves too busy to help procrastinators who wait until April to start the process.

“‘There are literally hundreds of changes, extensions and deletions that we will consider this year when preparing returns for our clients,’ said accountant William Rivero of accounting firm Correia, Rivero & LeFebvre. ‘Because of these changes, we are requesting our clients try to have their information to us no later than March 21, 2016.’

“Early preparation for filing helps avoid everything from document issues to accountant time constraints.

“2. Methods of Tax Filing Are Evolving

“The way that people actually file their taxes is evolving, with many opting for tax preparation software over filing by hand.

“For example, TurboTax offers free and affordable services to help you fill out your tax returns. However, this software can cost as much as $79.99 if you’re self-employed or a small business owner. The IRS offers Free File Software, but it’s only available to those whose annual income is below $62,000. If your income is above $62,000, the IRS offers Free File Fillable Forms, but you must know how to do your taxes yourself.

“There are distinct advantages and disadvantages to various tax-filing methods, and taxpayers should spend a bit of time choosing the method that is right for them.

“3. The IRS Is Trying to Prevent Identity Theft

“With new changes in technology, the IRS is increasingly concerned about tax-filing-related identity theft. There have been many stories in the news in recent years about criminals stealing people’s identities and then using those identities to file false tax returns. But during the 2016 tax season, new security measures are expected to prevent this.

“According to a statement on its website, the IRS is partnering with state tax administrators and tax leaders to protect consumers against identity theft refund fraud by using more than 20 new data elements on tax returns this year.

“‘We are breaking new ground in the battle against identity theft,’ said IRS Commissioner John Koskinen in a statement. ‘Taxpayers will have more protection than ever when they file their tax returns.’

“4. But These Safety Precautions Could Make the Process Longer

“CBS MoneyWatch reports, however, that this effort against identity theft and fraud will mean ‘more stringent passwords to access tax software’ and security questions for taxpayers. There will also be a new feature that will lock users out after too many failed log-in attempts. Although these data elements should detect possible identity theft refund fraud, it also means tax-filing might be a longer process.

“And as with all changes, these new security measures might encounter some hiccups and complications the first time through. So, make sure you allot yourself plenty of time to get through the tax-filing process this year.

“5. IRS Customer Service Levels Might Be Low — Again

“In November 2015, Koskinen warned that customer service will be even worse during the 2016 tax season, reports the Washington Post.

“During the 2015 tax season, customer service levels were low at only 37.6 percent, reports Forbes. Out of approximately 83.2 million taxpayers who contacted the IRS via its Customer Account Services number, only about 8.3 million were connected to a live person. And, the average wait time to talk to a person was 23.5 minutes.

“But, USA Today reports that during a January 2016 media briefing, Koskinen said there might shorter telephone waiting times this year. ‘We expect the level of service on the phone will be better than last year,’ he said.

“Our goal would clearly be to have [waiting times] under 20 minutes.’”