More than four out of five returns are expected to be filed electronically, with a similar proportion of refunds issued through direct deposit. 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. The IRS anticipates issuing more than nine out of 10 refunds in less than 21 days.
2016 IRS Free File Program
The IRS Free File program, available at IRS.gov, opens Friday, Jan. 15, and the IRS will begin accepting and processing all tax returns on Tuesday, Jan. 19. Commercial partners of the IRS offer free brand-name software to about 100 million individuals and families with incomes of $62,000 or less. Seventy percent of the nation’s taxpayers are eligible for IRS Free File.
All taxpayers regardless of income will again have access to free online fillable forms, which provide electronic versions of IRS paper forms to complete and file. This option, available through IRS.gov, is free.
The IRS also reminded people to plan ahead, especially students and home buyers who request a copy of a tax transcript or tax return information for a specific year using the online Get Transcript tool. They should allow five to 10 days from the time they make the request to receive it by mail.
Protecting Taxpayers from ID-Theft-Related Refund Fraud
The IRS is working diligently with state tax authorities and the tax industry to address tax-related identity theft and refund fraud. As part of the Security Summit effort, stronger protections for taxpayers and the nation’s tax system have gone into effect for the 2016 tax filing season.
The new measures attack tax-related identity theft from multiple sides. Many changes will be invisible to taxpayers but help the IRS, states and the tax industry provide new protections. There will be new security requirements when you’re preparing your taxes online, especially when you sign in to your tax software account, to better protect your tax software account and personal information.
How to Avoid Tax Related Identity Theft
Despite these security improvements to fight identity theft issues, the IRS will still process nine out of 10 federal refunds within 21 days. States have their own refund processing timeframes that may vary, and some states may make additional reviews to ensure refunds are being issued properly.
Health Care Basics and ACA Tax
Similar to last year, meeting the tax obligation of the Affordable Care Act for the vast majority of taxpayers will simply mean checking a box to verify everyone on their return has health coverage. For others, IRS.gov/aca features useful information, tips and interactive online tools to help taxpayers with the premium tax credit, the individual shared responsibility requirement, and other tax features of the ACA.
The Affordable Care Act requires that a taxpayer and each member of their family either hasqualifying health coverage for each month of the year, qualifies for an exemption, or makes anindividual shared responsibility payment when filing their tax returns.
Here are some important ACA tax reminders:
- Check the box: Like last year, the vast majority of taxpayers will simply check a box on their tax return to indicate that each member of their family had qualifying health coverage for the whole year. No further action is required to report coverage.
- Claim a Coverage Exemption if you qualify: If you or anyone on your return did not have coverage for the entire year, you should determine if you qualify for one of the many coverage exemptions that are available. You can use our online interactive tool to help determine if you qualify.
- File to reconcile Advance Payments of the Premium Tax Credit: If you enrolled in coverage through the Health Insurance Marketplace during 2015, you most likely received the benefit of advance payments of the premium tax credit. You must file a tax return and submit Form 8962 to reconcile these payments with the actual premium tax credit to which you are entitled. You will need Form 1095-A from the Marketplace to complete Form 8962. Failure to reconcile your advance payments of the premium tax credit on Form 8962 may make you ineligible to receive future advance payments.
- Don’t wait for 1095-B/C: Many taxpayers will receive a Form 1095-B or 1095-C with information about their health care coverage. You may have heard that the IRS has extended the time for health coverage providers and employers to furnish these forms. You should be aware that you don’t have to wait for these forms in order to file your tax return and you don’t have to send these forms to the IRS. You can rely on other information to determine your health coverage. The IRS has additional information about these forms in questions and answers on IRS.gov/aca.
- Wait for Form 1095-A: If you enrolled in coverage through the Marketplace you should receive Form 1095-A from the Marketplace with important information that you need to accurately file your tax return. Unlike the Forms 1095-B and 1095-C, you should wait to file your tax return until you receive your Form 1095-A. Contact your marketplace with questions about your Form 1095-A.
VITA and ACA Tax Requirements
Low-and moderate-income taxpayers can get help meeting this health-care requirement and filing their return for free by visiting one of the more than 12,000 community-based tax help sites staffed by more than 90,000 volunteers that participate in the Volunteer Income Tax Assistance and Tax Counseling for the Elderly (VITA/TCE) programs. To find the nearest site, use the VITA/TCE Site Locator on IRS.gov.
What is a myRA?
In November, the Treasury Department launched myRA, a new, simple way to open a starter retirement account. myRA has no fees, and participants can fund their myRA accounts through a:
- Payroll deduction. Set up automatic direct deposit contributions to myRA through an employer.
- Checking or savings account. Savers can also fund a myRA account directly by setting up recurring or one-time contributions from a checking or savings account.
- Federal tax refund. At tax time, you may direct all or a portion of a federal tax refund to your myRA account.
For more information about myRA or to sign up for an account, visit www.myRA.gov.
Assistance Filing the Tax Return
Well over 90 percent of all tax returns are prepared using tax return preparation software. This software generally includes tax law help along with reminders and prompts about tax breaks and responsibilities. The IRS also reminds taxpayers that a trusted tax professional can also provide helpful information about the tax law. A number of tips about selecting a preparer and national tax professional groups are available on IRS.gov.
The IRS urges all taxpayers to make sure they have all their year-end statements in hand before they file their return. This includes Forms W-2 from employers, Forms 1099 from banks and other payers, and for those claiming the premium tax credit, Form 1095-A from the Marketplace. Doing so will help avoid refund delays and the need to file an amended return later.