The Internal Revenue Service started accepting tax returns this week, and already there's some confusion about when the new tax rules take effect. The short answer is that the tax plan Congress passed late last year won't affect how you file your 2017 taxes this spring. But to bring some clarity to the issue, TaxMama Eva Rosenberg joined Take Two's A Martinez to talk about the five things people should know before they file.
The deadline is April 17
This year, the traditional filing date of April 15 is a Sunday. And the following day is a legal holiday, so the IRS has extended this year's deadline by two days.
The medical expense threshold has been dropped to 7.5% (instead of 10%)
Medical expenses are more deductible than ever because we only reduced them by 7.5%. We were originally going to have to reduce them by 10% of adjusted gross income.
Obamacare penalties still apply
The one thing that everybody was so excited about in the State of the Union speech is that Obamacare penalties are gone. Not true. They are still in place for 2017 tax returns. You have to show insurance or pay penalties.
Alimony expenses are still deductible
People in California who pay alimony thought they couldn’t deduct alimony expenses. The good news is that has’t changed for this year. And it won’t change for people who already have existing divorce agreements. Many experts have said that as long as you have your divorce agreement in place by the end of this year, you can still deduct alimony, but to get it in place by December, you need to file divorce paperwork in court by May.
Some refunds will be delayed
For basic refunds, the IRS said they will start issuing them mid February. But for people who have earned income credit, child tax credit and American opportunity credit, the IRS will hold those for another couple weeks because there’s been so much fraud. With the Equifax breach, there’s a lot of ID theft with people filing phony tax credits. So they’re run through the IRS criminal investigation division to make sure the refunds are legitimate.