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Horizon Accountants  

Horizon Accountants
113 South Timber Way
Broadway, VA 22815

540-896-3330

Certified Public Accountant

Horizon Accountants' Tax Update 2016

January 2, 2017

RE: Tax Update

Dear clients,

The Internal Revenue Service will begin accepting e-files January 23, 2017. This year the IRS will hold refunds claiming the EITC or the ACTC until February 15, 2017. Affected taxpayers may not receive refunds until the week of February 27th. The filing deadline to submit 2016 tax returns is Tuesday April 18, 2017.

To check status of refunds go to irs.gov and access Where's My Refund? There is a new on line tool that allows taxpayers to check their IRS account. This can be found at irs.gov under "payments/finding-out-how-much-you owe.

This year the IRS is requiring every taxpayer to verify and confirm their bank account information in writing. A special form will be presented to you when you bring your information in and you will either confirm last year's routing and checking account number or provide updated routing and checking account numbers for 2016. You will be required to sign and date the form. We cannot submit the electronic file until the ETF information is checked.

The IRS has required us as preparers to complete a form 8867 to document certain requirements to file for the American Opportunity Education Tax Credit and the Child Tax Credit for 2016 tax returns. This will increase the tax preparation fee on average $15-20 if you are requiring this form.

The IRS is putting in electronic filing safeguards to W2 forms this year. Numbers will be input to provide additional tracking information to ensure your data is not compromised. This will also add $2 to the cost of tax preparation this year.

For Virginia tax returns taxpayers can elect to input their Virginia drivers license number to add an extra layer of security this year. This is purely elective so if you want to utilize this bring your driver's license along when you bring your tax information. There will be an additional charge of $5 for this service. In a few years it will be mandatory.

The state of Virginia is requiring us as tax preparers to input $0 on the Virginia Consumers Use Tax box on all returns unless you supply a number of out of state purchases. We expect most to have a $0.

This year the IRS will reject e-filed tax returns if ACA information is not included in the submitted electronic file. This means if you have an Obamacare Exchange plan you will need to have a copy of form 1095-A and possibly B or even C. Bring them all along.

We are also reminding taxpayers that if they hold > $10,000 in cash at any time in the year at a foreign bank outside the US they are required to file a special form to declare this activity. There are steep fines for non compliance. This letter serves as notice.

The tax code saw little change this year, a few expiring provisions such at pmi insurance deductions and energy credits. Most taxpayers will notice all most no changes. Businesses can now deduct up to $2,500 of expenditures as repairs this year. Previously they would have been depreciated. This does require a special election form each year and will be submitted through your electronic file if it pertains.

With the election of a new President Congress will begin formulating a tax overhaul focus. Tax rates will be lowered and parts of the ACA will be repealed. You can expect to see the fine for not having qualified health insurance to disappear. There is some talk of capping itemized deductions for taxable income >$250,000. A larger standard deduction and personal exemptions will be implemented to simplify deductions. Stay tuned.

We look forward to visiting with you and preparing the best possible return for you in 2016! Please call if you have questions or want further clarification.
Sincerely,

Lawrence R. Yoder, CPA
HORIZON ACCOUNTANTS

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