IRS Urges Taxpayers to Check Their Withholding – New Factors Increase Importance of Mid-Year Check Up
WASHINGTON — The Internal Revenue Service today encouraged taxpayers to consider a mid-year tax withholding checkup following several new factors that could affect their refunds in 2017. Taking a closer look at the taxes being withheld can help ensure the right amount is withheld, either for tax refund purposes or to avoid an unexpected tax bill next year.
The withholding review takes on even more importance this year given a new tax law change that requires the IRS to hold refunds a few weeks for some early filers in 2017 claiming the Earned Income Tax Credit and the Additional Child Tax Credit. In addition, the IRS and state tax administrators continue to strengthen identity theft and refund fraud protections, which means some tax returns could again face additional review time next year to protect against fraud.
“With these changes, it makes good sense on many different levels to check on your withholding and plan ahead for next tax season,” said IRS Commissioner John Koskinen. “It’s a personal choice if you want to have extra money withheld to get a bigger tax refund, but you have options available if you prefer to have a smaller refund next year and more take-home money now.”
So far in 2016, the IRS has issued more than 102 million tax refunds out of 140 million total individual returns processed, with the average refund well over $2,700. Historically, the refund figure has increased over time in size.
By adjusting the Form W-4, Employee’s Withholding Allowance Certificate, taxpayers can ensure that the right amount is taken out of their pay throughout the year so that they don’t pay too much tax and have to wait until they file their tax return to get any refund. Employers use the form to figure the amount of federal income tax to be withheld from pay.
Some Refunds Delayed in 2017
When considering refund issues, the IRS wants taxpayers to be aware several factors could affect the timing of their tax refunds next year.
A major change will affect some early tax filers claiming two key credits who won’t see their refunds until after Feb. 15.
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 agency 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. Even though the IRS cannot issue refunds for some early filers until at least Feb. 15, the IRS reminds taxpayers that most refunds will still be issued within the normal timeframe: 21 days or less, after being accepted for processing by the IRS.
”This is an important change to be aware of for some taxpayers used to getting an early refund,” Koskinen said. “We’ll be focusing on awareness of this change throughout the fall, but it’s important for taxpayers who might be affected by this to be aware of the change for their planning purposes. Although we still expect to issue most refunds within 21 days, we don’t want people caught by surprise if they get their refund a few weeks later than previous years.”
Stronger Security Filters and Tax Refund Processing
As the IRS steps up its efforts to combat identity theft and tax refund fraud through its many processing filters, legitimate refund returns sometimes get delayed. While the IRS is working diligently to stop fraudulent refunds from being issued, it is also focused on releasing legitimate refunds as quickly as possible.
The IRS, state tax agencies and the private sector tax industry continue to work together to fight fraud through their unprecedented Security Summit partnership. Additional safeguards will be set in place for the upcoming 2017 filing season.
“These increased security screenings are invisible to most taxpayers,” Koskinen said. “But we want people to be aware we are taking additional steps to protect taxpayers from identity theft, and that sometimes means the real taxpayers face a slight delay in their refunds. As we continue improving our processes and working with the states and the tax industry, we will stop more fraud while also fine-tuning our tools to reduce the number of innocent taxpayers who might see a refund delay. “
The agency encourages taxpayers to check their tax withholding now. Whether they prefer more earned money during the year or a large refund, checking withholding can ensure people don’t receive an unexpected tax bill next year. Making these checks in the late summer or early fall can give taxpayers enough time to adjust their withholdings before the tax year ends in December.
Changes in Circumstances and Advance Premium Tax Credits
There are also some important reminders for taxpayers who receive advance payments of the Premium Tax Credit under the Affordable Care Act.
People who have advance payments of the premium tax credit made to their insurance company on their behalf should report life changes to their Marketplace. Changes in circumstances that should be reported include moving to a new address and changes to income or family size. Reporting these changes will help individuals avoid large differences between the advance credit payments and the amount of the premium tax credit allowed on their tax return, which may affect their refund or balance due.
People Working in the Shared Economy
The IRS encourages people in the shared economy who also have a job with an employer to take a close look at their withholding, which can help avoid unexpected tax issues with their income from such things as driving a car or renting a home.
Making a Withholding Adjustment
In many cases, a new Form W-4, Employee’s Withholding Allowance Certificate, is all that is needed to make an adjustment. Taxpayers submit it to their employer, and the employer uses the form to figure the amount of federal income tax to be withheld from pay
The IRS offers several online resources to help taxpayers bring taxes paid closer to what is owed. They are available anytime on IRS.gov. They include:
- IRS Withholding Calculator — Online tool helps determine the correct amount of tax to withhold.
- IRS Publication 505 — Tax Withholding and Estimated Tax.
- Tax Withholding — Complete information on withholding, estimated taxes, FAQs, more.
Self-employed taxpayers, including those involved in the sharing economy, can use the Form 1040-ES worksheet to correctly figure their estimated tax payments. If they also work for an employer, they can often forgo making these quarterly payments by instead having more tax taken out of their pay.
Founded in 1998, AmTrust Financial Services has earned an “A” (Excellent) Financial Size IX rating from A.M. Best, while continuing their commitment to excellence in providing property and casualty insurance for small to mid-sized businesses. AmTrust Financial Services offers a philosophy of niche diversity with a focus on low-hazard risk, with extensive underwriting experience and innovative and technology driven insurance products.
HR Strategies is pleased to have been a partner with AmTrust Financial Services, Inc. for the past 8 years to accommodate the Workers’ Compensation insurance needs of our clients.
It was just announced yesterday in the PEO Compass that AmTrust has become one of the 3rd largest providers of workers’ compensation in the country! Below is their official announcement on this tremendous accomplishment:
Dear Agent Partner,
We’re proud to relay that a recently released workers’ comp market share report conducted by Aon Benfield indicates that AmTrust is now the 3rd-largest workers’ comp carrier in the U.S.
This confirms similar findings in a report conducted in April this year by SNL Financial, which also ranked AmTrust as the 3rd largest workers’ comp carrier nationwide. These reports demonstrate our ongoing growth and committment to the workers’ comp market.
What’s more, AmTrust continues to experience unprecedented growth across all lines of businesses, including our Business owners Policy, Commercial Auto, EPLI and General Liability products, all of which serve as a perfect complement to our Workers’ Comp product. Recently, we introduced a new Cyber Liability product to cover the growing risk of a data breach for small businesses.
AmTrust’s financial strength and unprecedented growth signal a bright future ahead:
- “A” (Excellent) rating for financial strength by A.M. Best, financial size category (FSC) “XIV”
- Publicly traded on the NASDAQ Global Market under the stock symbol AFSI
- Ranked as best-managed insurance company in U.S. by Forbes magazine in 2014
- Innovative technology: Our web-based quote, binding and policy access system, AmTrust Online, is simple, efficient, accurate and available 24/7
For more information about how AmTrust can better serve your customers’ needs, please contact your regional sales manager or visit our website.
AmTrust North America
EO Select Check
Exempt Organizations Select Check is an online search tool that allows users to search for and select an exempt organization and check certain information about its federal tax status and filings. It consolidates three former search sites into one, providing expanded search capability and a more efficient way to search for organizations that:
- Are eligible to receive tax-deductible charitable contributions (Publication 78 data). Users may rely on this list in determining deductibility of their contributions (just as they did when Publication 78 was a separate electronic publication rather than part of Select Check). Updated data posting date: 08-08-2016
Please be aware of the following when searching for organizations in this database:
1. Certain eligible donees (i.e., churches, group ruling subordinates, and governmental units) may not be listed in this database. See Other Eligible Donees for more information.
2. “Doing business as” (also known as DBA) names of organizations are not listed in this database. See Search Tips for additional guidance.
- Have had their tax-exempt status automatically revoked under the law because they have not filed Form 990 series returns or notices annually as required for three consecutive years (Auto-Revocation List) Updated data posting date: 08-08-2016
- Have filed a Form 990-N (e-Postcard) annual electronic notice. (Most small exempt organizations whose annual gross receipts are normally $50,000 or less are required to electronically submit Form 990-N, unless they choose instead to file a completed Form 990 or Form 990-EZ.) Updated data posting date: 08-29-2016
In addition to searching for a particular organization, users may download a complete list of each of the three types of organizations through Exempt Organizations Select Check.
Click Here for the Exempt Organizations Select Check Tool.
There are many forms of employee theft. Some of which include theft by stealing tangible items (money, products or supplies), confidential information (customer lists, formulas), or time (falsifying time records). All the above have become all-too-familiar for employers. Below are 3 steps you can take to reduce employee theft:
- Install video cameras in areas that you think might be susceptible to theft.
- Check the laws in your state for limitations on where you can have video surveillance.
- Do not place cameras in obvious places where employees expect to have legitimate privacy (i.e. restrooms, changing areas or locker rooms).
- Be sure to notify your employees of any new surveillance installations.
- Timecard Audits
- Regularly audit employee timecards, reviewing for discrepancies that may indicate falsified time.
- Protect Confidential Information
- Develop company policies and procedures to protect confidential information
- Put in place a Confidentiality & Trade Secrets Policy
- Remove any administrative access that employees may have on their computer.
- Prohibit the copying of company files to anything they can take home with them.
- Develop company policies and procedures to protect confidential information
If you suspect an employee of stealing, remember the following:
- Conduct a thorough and impartial investigation into the suspected theft and carefully document the results.
- Handling Termination
- Consider how you communicate the reason for termination to the employee.
- Tell the employee that the reason for termination is because of policy violations, lack of trust, or loss of confidence, instead of telling the employee that he/she is being terminated because of theft.
- Withholding Pay
- Under no circumstances should an employer withhold the value of the lost property from the employee’s pay. Instead, consult with an HR Professional (aka HR Strategies) to determine the options available to you to recoup lost property.
If you have any questions, or would like HR Strategies to help you put a Confidentiality & Trade Secrets Policy in place, please call your HR Consultant at 770-339-0000, option 3.
The Internal Revenue Service today announced important changes to help taxpayers comply with revisions to the Individual Taxpayer Identification Number (ITIN) program made under a new law. The changes require some taxpayers to renew their ITINs beginning in October.
The new law will mean ITINs that have not been used on a federal tax return at least once in the last three years will no longer be valid for use on a tax return unless renewed by the taxpayer. In addition, ITINs issued prior to 2013 that have been used on a federal tax return in the last three years will need to be renewed starting this fall, and the IRS is putting in place a rolling renewal schedule, described below, to assist taxpayers.
If taxpayers have an expired ITIN and don’t renew before filing a tax return next year, they could face a refund delay and may be ineligible for certain tax credits, such as the Child Tax Credit and the American Opportunity Tax Credit, until the ITIN is renewed.
“The ITIN program is critical to allow millions of people to meet their tax obligations,” said IRS Commissioner John Koskinen. “The IRS will be taking steps to help taxpayers with these changes, and we’re designing this effort to minimize the burden as much as possible. We will be working with partner groups on an outreach effort to share information about these changes to ensure people understand what they need to do in advance of next year’s tax season.”
The ITIN changes are required by the Protecting Americans from Tax Hikes (PATH) Act enacted by Congress in December 2015. These provisions, along with new procedures to help taxpayers navigate these changes, are outlined in IRS Notice 2016-48, which was released today.
Who Has to Renew an ITIN
The IRS emphasizes that no action is needed by ITIN holders if they don’t need to file a tax return next year. There are two key groups of ITIN holders who may need to renew an ITIN so it will be in effect for returns filed in 2017:
- Unused ITINs. ITINs not used on a federal income tax return in the last three years (covering 2013, 2014, or 2015) will no longer be valid to use on a tax return as of Jan. 1, 2017. ITIN holders in this group who need to file a tax return next year will need to renew their ITINs. The renewal period begins Oct. 1, 2016.
- Expiring ITINs. ITINs issued before 2013 will begin expiring this year, and taxpayers will need to renew them on a rolling basis. The first ITINs that will expire under this schedule are those with middle digits of 78 and 79 (Example: 9XX-78-XXXX). The renewal period for these ITINs begins Oct. 1, 2016. The IRS will mail letters to this group of taxpayers starting in August to inform them of the need to renew their ITINs if they need to file a tax return and explain steps they need to take. The schedule for expiration and renewal of ITINs that do not have middle digits of 78 and 79 will be announced at a future date.
How to Renew an ITIN
Only ITIN holders who need to file a tax return need to renew their ITINs. Others do not need to take any action.
Starting Oct. 1, 2016, ITIN holders can begin renewing ITINs that are no longer in effect because of three years of nonuse or that have a middle digit of 78 or 79. To renew an ITIN, taxpayers must complete a Form W-7, Application for IRS Individual Taxpayer Identification Number, follow the instructions and include all information and documentation required. To reduce burden on taxpayers, the IRS will not require individuals renewing an ITIN to attach a tax return when submitting their Form W-7. Taxpayers are reminded to use the newest version of the Form W-7 available at the time of renewal which will be posted in September (Use version “Rev. 9-2016”).
There are three methods taxpayers can use to submit their W-7 application package to renew their ITIN. They can:
- Mail their Form W-7 — along with the original identification documents or certified copies by the agency that issued them — to the IRS address listed on the form (identification documents will be returned within 60 days),
- Use one of the many IRS authorized Certified Acceptance Agents or Acceptance Agents around the country, or
- In advance, call and make an appointment at an IRS Taxpayer Assistance Center in lieu of mailing original identification documents to the IRS.
Other Steps to Help Taxpayers
To make this renewal effort easier and reduce paperwork, the IRS will be offering a family option for ITIN renewal. If any individual having an ITIN middle digit of 78 or 79 receives a renewal letter from the IRS, they can choose to renew the ITINs of all of their family members at the same time rather than doing them separately over several years. Family members include the tax filer, the spouse and any dependents claimed on their tax return.
The IRS is also working closely with a variety of partner and outreach groups to share information about the ITIN changes and help raise awareness about the new guidelines. The IRS will be providing additional information and material to share with these groups and taxpayers in the near future.
“We encourage people who need to renew their ITINs to plan ahead and take action this fall to avoid issues when they file tax returns in early 2017,” Koskinen said.
New requirement for dependents whose passports do not have a date of entry into the U.S.
Beginning Oct. 1, 2016, the IRS will no longer accept passports that do not have a date of entry into the U.S. as a stand-alone identification document for dependents from countries other than Canada or Mexico or dependents of military members overseas. Affected applicants will now be required to submit either U.S. medical records for dependents under age six or U.S. school records for dependents under age 18, along with the passport. Dependents aged 18 and over can submit a rental or bank statement or a utility bill listing the applicant’s name and U.S. address, along with their passport.
Other information about ITINs
ITINs are for federal tax purposes only and are not intended to serve any other purpose. ITINs that are only used on information returns filed with the IRS by third parties do not need to be renewed. An ITIN does not authorize one to work in the United States or provide eligibility for Social Security benefits or the Earned Income Tax Credit. ITINs are not valid identification outside the tax system and do not establish immigration status.
Each year, many people get a larger refund than they expect. Some find they owe a lot more tax than they thought they would. If this has happened to you, review your situation to prevent a tax surprise. Did you marry? Have a child? Change in income? Life events can have a major impact on your taxes. Bring the taxes you pay closer to the amount you owe. Here are some tips to help you come up with a plan:
- New Job. When you start a new job, you must fill out a Form W-4, Employee’s Withholding Allowance Certificate, and give it to your employer. Your employer will use the form to figure the amount of federal income tax to withhold from your pay. Use the IRS Withholding Calculator on IRS.gov to help you fill out the form. This tool is easy to use and it’s available 24/7.
- Estimated Tax. If you earn income that is not subject to withholding you may need to pay estimated tax. This may include income such as self-employment, interest, dividends or rent. If you expect to owe $1,000 or more in tax, and meet other conditions, you may need to pay this tax. You normally pay it four times a year. Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to figure the tax.
- Life Events. Check to see if you need to change your Form W-4 or change the amount of estimated tax you pay when certain life events take place. A change in your marital status, the birth of a child or the purchase of a new home can change the amount of taxes you owe. In most cases, you can submit a new Form W–4 to your employer anytime.
- Changes in Circumstances. If you are receiving advance payments of the premium tax credit, it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance payments of the premium tax credit help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.
With Summer almost coming to an end, we continue to find ways of having a healthy lifestyle and what better way to stay busy then by doing something we love!
Most people like working out but want to participate in activities that don’t feel like working out. One solution to staying healthy is by doing the things you already love to do or have always wanted to try. That hobby you’ve been wanting to try or have been putting off could be your key for a healthier, happier life.
Hobbies engage you physically and mentally. It’s been proven that people who actively participate in hobbies are at a lower risk for depression and dementia. Hobbies are a way for people to stay engaged on multiple levels. People who have a hobby “are generally healthier,” says Peter Lichtenberg, Ph.D., Director of the Institute of Gerontology at Wayne State University. Most hobbies involve at least some level of mental activity and give people a reason to stay connected to other people with similar interests.
So you may be asking, “What kind of hobby is best?” Hobbies that require expertise are more satisfying because developing an expertise in something like photography or astronomy requires commitment which results in a higher level of engagement. Hobbies that involve some form of physical fitness such as walking, provides a physical benefit as well. Walking is linked to reducing stress and anxiety.
Hobbies can be thought of on three levels:
Hobbies act as a diversion that helps us pass the time and makes us unaware that time is passing. They can also become a passion that we become truly engaged in. And finally, they are something that creates a sense of purpose. We all need that. The ideal hobby is a combination of all three.
If you’re looking for a hobby, many community collages offer classes in activities that range from gardening to watercolor painting. It’s also a great way to meet other people that are also interested in the same activities.
For additional online information and resources about maintaining well-being and wellness, go to http://www.eapconsultants.com and enter your password. If you do not know your password, send an email to firstname.lastname@example.org and include the name of your employer.