There's good news for those who prefer to wait until the last minute to file their federal taxes: You have three extra days this year.
Federal income tax returns are due April 18. April 15 falls on a Saturday, and Emancipation Day is on April 17, a legal holiday for the District of Columbia.
But if even if you're an early bird, don't expect to get that refund money as fast as you have in previous years. A federal law that took effect this year requires the Internal Revenue Service to hold any refunds until Feb. 15 for taxpayers who claimed certain credits – the Earned Income Tax Credit or an Additional Child Tax Credit.
"This means you won't get your money until at the earliest, the week of Feb. 27," factoring in weekends and the Presidents Day holiday, said Army Lt. Col. Samuel Kan, the executive director of Armed Forces Tax Council, in an interview about changes in tax law that could affect service members and their families.
Refunds are being delayed because of steps taken to combat fraud in connection with these two credits, Kan said. The additional time, required by the Protecting Americans from Tax Hikes, or PATH, Act of 2015, helps the IRS stop fraudulent refunds to identity thieves and to those claiming fraudulent wages and withholdings.
The EITC is a benefit for working people with low to moderate income who meet certain requirements. The maximum amount of credit for tax year 2016 is $6,269, for those with three or more qualifying children. You must file a tax return to qualify for the credit and reduce the taxes you owe – and possibly receive a refund. You might qualify for the credit (and a refund) even if you don't owe tax.
The Additional Child Tax Credit is for certain people who get less than the full amount of the regular Child Tax Credit – also possibly giving a refund even if they don't owe any tax. (More on child credits here.)
Other highlights this year:
HEALTH CARE CATCH
Those in the military health care system generally don't have to worry about the requirements for minimum essential health care coverage under the Affordable Care Act, because the military's health care qualifies as such.
The employer provides that information on Form 1095, which is mailed to you, and you'll use when preparing your taxes or having them prepared.
But Kan cautioned that service members who may have joined or left the military last year might face hefty penalties if they didn't have the required minimum coverage during the time they weren't in the military.
For those who didn't have required minimum coverage, the penalties are significantly higher this year, he said: "If you have a family, your
penalty is more than doubling. Last year the penalty was a maximum of $975. This year, it's $2,085."
"If you left the military or entered, you have to take that into consideration," he added.
The IRS has issued rules that these couples are considered married for federal income tax purposes, regardless of the couple's location. If the relationship would be recognized as marriage under the laws of at least one state, possession or territory of the U.S. – even if the marriage was in a foreign country – it is considered a marriage for federal income tax purposes.
The regulation went into effect Sept. 2. This doesn't apply to other relationships – registered domestic partnerships, civil unions, or other similar formal relationships not recognized as marriage under that jurisdiction's laws.
Some service members who are married to foreign nationals may run into snags because of requirements related to Social Security numbers and Individual Taxpayer Identification numbers, or ITINs, Kan said.
"In the past, there were certain things you could do retroactively. … But if you don't have a Social Security number by the time the tax return is due [plus the extensions], you're not going to be able to later file for the Earned Income Tax Credit, the child tax credit, the American Opportunity Tax Credit," Kan said. "You're going to want to get a Social Security number before the due date so you can qualify for those.
"If you can't get a Social Security number, you'll want to get an Individual Taxpayer Identification number, because there are ramifications."
Other new rules mean that some taxpayers' ITINs have expired. This year, if an ITIN hasn't been used in filing taxes in the three years prior to Jan. 1, 2017, it expired. The ITINs also are expiring on a rolling basis starting in 2017; first to go are ITINs whose fourth and fifth digits are either a 78 or 79.
"People with ITINs need to be sure they keep track of that issue, and if applicable, apply for renewal," Kan said.
That requires submitting a Form W-7 and can take up to 11 weeks, he said, up from seven weeks prior to tax season.
It's more difficult to go through this process abroad. The Armed Forces Tax Council has been working with the military services and the IRS to get Certified Acceptance Agents abroad to help process the ITINs, Kan said.
"We've trained up a lot of the Certified Acceptance Agents abroad already, so we're putting procedures in place to address that," he added.
If you rolled over money into an Individual Retirement Account last year and you inadvertently missed the 60-day time limit for properly rolling the money over, the IRS has a new rule that allows taxpayers who encountered a variety of mitigating circumstances to ask for a
waiver and avoid extra taxes.
This might apply to some spouses who left a job and rolled over 401(k) money, for example, or those who left the military and rolled over Thrift Savings Plan money.
Taxpayers can provide a self-certification letter to the administrator or trustee of the retirement plan or IRA receiving the rollover that they qualify for the waiver.