Tax Day is April 18, 2017, but Dec. 31, 2016, is the last day for taxpayers to make most changes that will affect their 2016 returns, the IRS reminded investors in a notice posted on its website.
For example, deductions for charitable donations made with a credit card, even if the bill isn’t paid until after the new year, can be made on the 2016 return. The same principle applies for clients who still write checks to charities; if it was mailed before the end of the year, it can be claimed on the 2016 return.
Individuals who haven’t filed a return in the past three years, and who are not eligible for a Social Security number, will find their Individual Taxpayer Identification number (ITIN) expired on Jan. 1, 2017. Furthermore, ITINs with middle digits of 78 or 79 will also expire, the IRS noted. Clients who may be affected by that change should apply for a new ITIN immediately to avoid a delay in their refunds.
The IRS noted that as of Dec. 21, ITIN applications were being processed in “as little as seven weeks,” and expects the timeframe to lengthen to 11 weeks during tax season. The agency will process applications filed in December before those “submitted in January or February at the height of tax season.”
Clients who turned age 70 ½ in 2016 can wait until April 1, 2017, to begin receiving distributions from IRAs and workplace retirement accounts. Most contributions should be made before the end of the year, but 2016 IRA contributions can be made up until April 18. The 2016 limits for clients 50 and older are $6,500 in Roth and traditional IRAs, and $15,500 in SIMPLE IRAs.
If clients have moved, they should notify the Postal Service, their employer and the IRS (using Form 8822) to make sure they receive their tax documents. If they purchased health insurance through the Health Insurance Marketplace, they should also update their address with the Marketplace. Moving may also extend the enrollment period.
Similarly, a name change should be reported to the IRS and the Social Security Administration to avoid delays in refunds.
— Read Investors Beware: Tax ‘Volatility,’ Regulatory Upheaval on Horizon on ThinkAdvisor.