As the agency processes millions of 2017 tax returns, it will simultaneously have to interpret and implement a new system for 2017.
The IRS needs more funding as it implements the Republicans' new tax law, but can also take some steps to improve taxpayer service that don't require any additional money, the agency's in-house watchdog said.
Olson said the IRS was still calculating the impact of the new law, but preliminary estimates said it would need an extra $495 million this year and next year to implement the sweeping overhaul of individual and corporate taxes. Processing on electronic returns will start January 29; processing on paper returns will start in mid-February.
Another point to note is that just because you can file on January 29, doesn't mean that you'll be ready to do so. While the IRS will process those returns when received, it can not issue related refunds before mid-February.
The IRS said it will issue nine out of 10 refunds in less than 21 days.
Trump has said the new withholding amounts could start in February.
"The IRS absolutely needs more funding", National Taxpayer Advocate Nina Olson wrote in her annual report to Congress. Olson noted the budget cuts have challenged the IRS's ability to perform even the basic tasks of administering the tax system, not to mention the work involved in getting the new Tax Cuts and Jobs Act up and running at the IRS and for taxpayers. Using an electronic filing PIN is no longer an option.
Many software companies and tax professionals will be accepting tax returns before January 29 and then will submit the returns when IRS systems open. The IRS strongly encourages people to file their tax returns electronically for faster refunds.
Specifically, if you claim the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC), the IRS can not issue you a refund until mid-February at the earliest. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting February 27, 2018, if they chose direct deposit and there are no other issues with the tax return.
Specifically, one major variety of identity theft involves criminals filing phony tax returns under the names of unsuspecting Americans with the goal of claiming a refund to which they aren't entitled. Experts have said the massive Equifax breach.
Here's where filing early can help.
But that does not mean the IRS has a year to get up to speed.
The bottom line is that it can be smart to file your tax return as soon as you can, even if you aren't entitled to a refund.
For the most part, the new tax law affects income earned in 2018, and the returns taxpayers must file this year deal with income earned in 2017, under the old tax rules. The Motley Fool has a disclosure policy.
- IPhone battery catches fire in Zurich store: Apple Genius suffers burns
- Greece no longer requires Muslims to use Sharia law
- UPSC Civil Services (Mains) 2017 exam results declared. Check at upsc
- Which Way Traders Signposts Sears Holdings Corporation (SHLD), FNB Corporation (FNB) Stocks?
- Mallika Sherawat Insists She Doesn't 'Own Or Rent An Apartment In Paris'
- Total War: Three Kingdoms Announced - You're Headed to China
- Meghan Markle Deletes Her Social Media Accounts Ahead Of The Royal Wedding
- Top Scotland doctor calls for NHS funding, not thanks
- Nintendo Switch Achieves New Milestone in US History
- Sheffield United complete double swoop for Lee Evans and James Wilson