IRS Tax News

  • 24 Jan 2017 10:43 AM | Anonymous

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    WASHINGTON — The Internal Revenue Service said today that it successfully started accepting and processing 2016 federal individual income tax returns on schedule. More than 153 million returns are expected to be filed this year.

    People have until Tuesday, April 18, 2017 to file their 2016 returns and pay any taxes due. The deadline is later this year due to several factors. The usual April 15 deadline falls on Saturday this year, which would normally give taxpayers until at least the following Monday. However, Emancipation Day, a D.C. holiday, is observed on Monday, April 17, giving taxpayers nationwide an additional day to file. By law, D.C. holidays impact tax deadlines for everyone in the same way federal holidays do. Taxpayers requesting an extension will have until Monday, Oct. 16, 2017 to file.

    "Following months of hard work, we successfully opened our processing systems today to start this year’s tax season,” said IRS Commissioner John Koskinen. “Getting to this point is a year-round effort for the IRS and the nation’s tax community. The dedicated employees of the IRS look forward to serving taxpayers this filing season, and I want to thank all of the tax and payroll community for their hard work that makes tax time smoother for the nation.”

    The IRS expects more than 70 percent of taxpayers to get tax refunds this year. Last year, 111 million refunds were issued, with an average refund of $2,860.

    Refund Delays

    A law change now requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until Feb. 15. Under this change required by the Protecting Americans from Tax Hikes (PATH) Act, the IRS must hold the entire refund — even the portion not associated with the EITC and ACTC. Even though the IRS will begin releasing EITC and ACTC refunds on Feb. 15, many early filers will still not have actual access to their refunds until the week of Feb. 27. The additional delay is due to several factors, including weekends, the Presidents Day holiday and the time banks often need to process direct deposits.

    This law change gives the IRS more time to detect and prevent fraud. Beyond the EITC and ACTC refunds and the additional security safeguards, the IRS anticipates issuing more than nine out of 10 refunds in less than 21 days. However, it’s possible a particular return may require additional review and take longer. Taxpayers are reminded that state tax agencies have their own refund processing timeframes that vary, and some states may make additional reviews to ensure their refunds are being issued properly. Even so, taxpayers should file as usual, and tax return preparers should submit returns as they normally do.

    Use e-File and Free File

    The IRS expects more than 80 percent of returns to be filed electronically. Choosing e-file and direct deposit remains the fastest and safest way to file an accurate income tax return and receive a refund.

    The IRS Free File program, available at IRS.gov, gives eligible taxpayers a dozen options for brand-name products. Free File is a partnership with commercial partners offering free brand-name software to about 100 million individuals and families with incomes of $64,000 or less. Seventy percent of the nation’s taxpayers are eligible for IRS Free File. People who earned more than $64,000 may use Free File Fillable Forms, the electronic version of IRS paper forms.

    Protecting Taxpayers from Identity Theft-Related Refund Fraud

    The IRS continues to work with state tax authorities and the tax industry to address tax-related identity theft and refund fraud. As part of the Security Summit effort, stronger protections for taxpayers and the nation’s tax system are in effect for the 2017 tax filing season.

    The new measures attack tax-related identity theft from multiple sides. Many changes will be invisible to taxpayers but will help the IRS, states and the tax industry provide new protections. New security requirements will better protect tax software accounts and personal information. 

    Renew ITIN to Avoid Refund Delays

    Many Individual Taxpayer Identification Numbers (ITINs) expired on Jan. 1, 2017. This includes any ITIN not used on a tax return at least once in the past three years. Also now expired is any ITIN with middle digits of either 78 or 79 (Example: 9NN-78-NNNN or 9NN-79-NNNN). Affected taxpayers should act soon to avoid refund delays and possible loss of eligibility for some key tax benefits until the ITIN is renewed. An ITIN is used by anyone who has tax-filing or payment obligations under U.S. tax law but is not eligible for a Social Security number.

    It can take up to 11 weeks to process a complete and accurate ITIN renewal application. For that reason, the IRS urges anyone with an expired ITIN needing to file a return this tax season to submit their ITIN renewal application soon.

    New AGI requirement for e-file

    All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a tax filing software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

    Free Tax Help

    Low- and moderate-income taxpayers can get help filing their tax return for free. More than 90,000 volunteers around the country can help people correctly complete their return.

    To get this filing help, taxpayers can visit one of the more than 12,000 community-based tax help sites that participate in the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs. To find the nearest site, use the VITA/TCE Site Locator on IRS.gov or the IRS2Go mobile app.

    Filing Assistance

    The IRS reminds taxpayers that a trusted tax professional can provide helpful information about the tax laws. A number of tips about selecting a preparer and information about national tax professional groups are available on IRS.gov.

    The IRS urges all taxpayers to make sure they have all their year-end statements in hand before filing. This includes Forms W-2 from employers and Forms 1099 from banks and other payers. Doing so will help avoid refund delays and the need to file an amended return.

    Online tools

    Many tax issues can now be resolved online or by phone from the convenience of a home or office. The IRS urges taxpayers to take advantage of the many tools and other resources available on IRS.gov. IRS phone lines will be busy again this year, so in order to save time, people should first visit the IRS website for tax assistance.


  • 11 Jan 2017 1:24 PM | Anonymous

    WASHINGTON – The Internal Revenue Service, state tax agencies and tax industry leaders today warned tax professionals to be alert to an email scam from cybercriminals posing as clients soliciting their services.

    A new variation of this phishing scheme is targeting accounting and tax preparation firms nationwide. The scheme's objective is to collect sensitive information that will allow fraudsters to prepare fraudulent tax returns.

    These latest phishing emails come in typically two stages. The first email is the solicitation, which asks tax professionals questions such as "I need a preparer to file my taxes." If the tax professional responds, the cybercriminal sends a second email. This second email typically has either an embedded web address or contains a PDF attachment that has an embedded web address.

    In some cases, the phishing emails may appear to come from a legitimate sender or organization (perhaps even a friend or colleague) because they also have been victimized. Fraudsters have taken over their accounts to send phishing emails.

    The tax professional may think they are downloading a potential client's tax information or accessing a site with the potential client's tax information. In reality, the cybercriminals are collecting the preparer's email address and password and possibly other information.

    The IRS urges tax professionals and tax preparation firms to consider creating internal policies or obtain security experts' recommendations on how to address unsolicited emails seeking their services.

    One tip: Never respond to or click on a link in an unsolicited email or PDF attachment from an unknown sender. As the IRS, states and the tax industry make progress in the fight against identity theft, cybercriminals are becoming more sophisticated in their efforts to steal additional client information. Criminals need more data in their effort to impersonate clients and file fraudulent returns to claim refunds, and schemes like this can help in this effort.

    Read more at Protect Your Clients; Protect Yourself, the Security Summit initiative to increase awareness about the tax professional community.


  • 30 Dec 2016 4:07 PM | Anonymous

    CE providers were generally unable to transmit CE records to the IRS between Sept. 14 and Dec. 30 while we transitioned to a new CE provider reporting system. The new reporting system has now launched and CE credits are being added to accounts daily. PTIN holders are encouraged to check their online accounts regularly for the latest information regarding their CE credits.

    PTIN holders who want to participate in the Annual Filing Season Program once their CE is reflected in their accounts can view a video here to see how to sign the Circular 230 consent and receive a Record of Completion. The consent must be signed by April 18, 2017, in order to participate for 2017.


  • 14 Dec 2016 9:09 AM | Anonymous

    WASHINGTON — The Internal Revenue Service today issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

    Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

    • 53.5 cents per mile for business miles driven, down from 54 cents for 2016
    • 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
    • 14 cents per mile driven in service of charitable organizations

    The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged.   The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

    Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

    A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

    These and other requirements are described in Rev. Proc. 2010-51. Notice 2016-79, posted today on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.


  • 04 Nov 2016 2:59 PM | Anonymous

    WASHINGTON – The Internal Revenue Service today issued an urgent alert to tax professionals who use IRS e-services to beware of an email asking them to update their accounts and directing them to a fake website.

    The subject line for the fraudulent email is “Security Awareness for Tax Professionals.” The “From” line is “Your e-Services Team.” It has both an IRS logo and an e-services logo that hyperlinks to a URL verified as a phishing site. The spoofing site poses as an e-services registration page.

    The scammers are attempting to exploit current IRS efforts to strengthen the e-services authentication process and its ongoing communications with tax professionals about their accounts. Scammers are attempting to steal e-services usernames and passwords or additional personal data through a registration page.

    If e-services users have already clicked on the fake logo and provided their username and password, they should contact the e-services help desk to reset their accounts. If the same password is used for other accounts, these should be changed as well. As an extra precaution, users should perform a deep security scan on their computers, re-evaluate their security controls and be alert to any other signs of identity theft or data compromise.

    Tax professionals should always go directly to IRS.gov to access e-services and never click on any links provided in emails.

    Tax professionals who receive a suspicious email should send it as an attachment to Phishing@irs.gov and then delete it. Recipients should not click on any links.

    The scammer email tells recipients that information was stolen from certain user accounts in 2015 from a state-sponsored actor. It says users are being asked to upgrade their e-service account to ensure protection of their information. It asks them to click on the login to access their accounts for security upgrade.

    The IRS is in the process of upgrading e-services security and has been in communication with tax professionals about updating their accounts.

    The IRS, state tax agencies and tax industry partners working together through the Security Summit have an awareness campaign underway called Protect Your Clients; Protect Yourself. The objective is to remind tax professionals they increasingly are the targets of identity thieves seeking ever larger amounts of taxpayer data to file fraudulent tax returns.

    Security Summit partners recommend tax professionals:

    • Always use robust security software
    • Use encryption software to protect taxpayer data
    • Use strong passwords and change them often
    • Learn to recognize phishing emails attempting to steal data
    • Never click on links or download attachments from suspicious emails
    • Beware of any communications claiming to be the IRS that are outside normal channels

    Review Protect Your Clients, Protect Yourself for various steps you can take to protect your customers’ information and your business. 


  • 03 Nov 2016 2:57 PM | Anonymous

    WASHINGTON – The Internal Revenue Service, state tax agencies and industry partners today finalized plans for 2017 to improve identity theft protections for individual and business taxpayers after making significant inroads this year against fraudulent returns.

    Public and private sector leaders announced today that their collective efforts through the Security Summit initiative have led to a marked improvement in the battle against identity theft during 2016. This is highlighted by the number of new people reporting stolen identities on federal tax returns falling by more than 50 percent, with nearly 275,000 fewer victims compared to a year ago.

    At a Washington press conference, Summit leaders also detailed new and expanded safeguards for taxpayers in the upcoming 2017 tax season. The 2017 focus revolves around “trusted customer” features that will help ensure the authenticity of the taxpayer and the tax return - before, during and after a tax return is filed. The additional protections will build on the 2016 successes that prevented fraudulent returns and protected tax refunds.

    “We’ve made remarkable progress this year in our efforts to protect taxpayers following the unprecedented coordination with the states, the tax industry and the financial sector,” said IRS Commissioner John Koskinen. “Working together, this coalition has expanded its activities in many different areas, and we are focused on strengthening our systems and processes even more for the upcoming tax season.”

    “It is gratifying to see how many different ways we have already identified and begun to implement changes,” said Dawn Cash, Commissioner, Oklahoma Tax Commission and President, Board of Trustees of the Federation of Tax Administrators. “Taxpayers in states across the country are benefiting from this important work.”

    Summit Helps Produce Successes in 2016 Against Identity Theft; Victims Down by Half

    Security Summit initiatives put in place in 2016 had a dramatic impact on the collective ability to identify and stop fraudulent returns. Key IRS statistics show decreases because Summit efforts were successful at preventing fraudulent returns from entering tax processing systems. This meant fewer bad returns, fewer bad refunds and fewer taxpayers becoming victims.

    Among the examples seen by the IRS:

    • Identity theft affidavits fell sharply. The number of people who filed affidavits with the IRS saying they were victims of identity theft dropped 50 percent during the first nine months of this year compared to 2015. The number of new affidavits filed fell to 237,750 compared to 512,278 for the first nine months of 2015.
    • More fraudulent returns stopped before processing. IRS statistics show a nearly 50 percent drop in the number of fraudulent returns that made it into the IRS tax processing systems– another sign the Summit efforts are working up front in the tax process. Through September of this year, the IRS stopped 787,000 confirmed identity theft returns, totaling more than $4 billion. For the same nine-month period in 2015, the IRS stopped 1.2 million confirmed identity theft returns, totaling about $7.2 billion.
    • Fraudulent refunds fell. The number of bank partners grew to 620 institutions from 514 institutions in 2015, enabling internal processes to continue improving. The number of suspect refunds stopped by banks and returned to the IRS dropped by more than 50 percent, to 108,539 in 2016 compared to 243,361 in 2015, demonstrating our improved ability to stop fraudulent returns before refunds are paid. The dollar amount of suspect refunds dropped to $239 million from $829 million in 2015.
    • Shared information stopped more bad returns. Industry and state partners provided information that helped improve IRS fraud filters and stop additional bad tax returns, including 57,000 that would have bypassed IRS processing filters without Summit assistance.
    • Shared data elements helped identify new areas. Several new data elements shared on tax returns from Summit partners helped the IRS stop over 74,000 suspicious returns, representing over $372 million in refunds that were prevented from being paid.

    “We've come a long way in a short time following the creation of the Security Summit,” Koskinen said. “But much more work remains to be done, and the partnership has agreed to take even more steps to protect taxpayers in 2017.”

    More Steps Planned for 2017 Tax Season

    For the 2017 filing season, the IRS and Summit partners will take additional actions. As with 2016, many of the new features will not be visible to taxpayers but will provide the IRS and states with the information they need to identify and stop fraudulent identity theft returns.

    Among the new or expanded features for 2017 that will protect taxpayers and the tax system:

    • New data elements transmitted by the tax industry with every tax return have been updated and expanded. In all, 37 new data elements will be added for 2017, providing additional information to strengthen the authentication that a tax return is being filed by the real taxpayer.
    • The tax industry will share with the IRS and states 32 data elements from business tax returns – extending more identity theft protections to business filers as well as individuals.
    • More than 20 states are working with the financial services industry to create their own version of a program that allows the industry to flag suspicious refunds before they are deposited into taxpayer accounts. Also, private sector partners are enhancing efforts to identify the “ultimate bank account” to ensure that the refunds go into the true taxpayers’ accounts – not fraudsters.
    • The Form W-2 Verification Code initiative started by the IRS last year will expand to 50 million forms in 2017 from 2 million in 2016. When completing a tax return, the 16-digit verification code should be entered when prompted by tax software used by both individuals and tax professionals to validate the information on the Form W-2. The IRS anticipates the verification code will be expanded in future years for all Forms W-2.
    • The software industry will continue to enhance software password requirements for individuals and tax professional users – providing additional safety prior to filing.

    Taken together, these “trusted customer” features will help the IRS and states do an even better job of detecting fraudulent returns and protecting taxpayers.

    As part of that effort, the Summit partners will launch a new Identity Theft Tax Refund Fraud Information Sharing and Analysis Center, or ISAC. This project, in its initial stages for 2017, will serve as an improved early warning system – identifying emerging identity theft schemes and quickly sharing that information among Summit partners so that all of the participants can enact safeguards.

    Summit partners believe an ISAC ultimately promises significant gains in detecting and preventing identity theft refund fraud and will provide better data to law enforcement to investigate and prosecute identity thieves. This effort will provide all Summit partners with a threat assessment capability, early warnings about problems and insights about identity theft fraud schemes through nimble and agile information sharing.

    Education Campaign Continues for Taxpayers, Tax Professionals

    The Security Summit will continue its campaigns to increase awareness about data security to both taxpayers and tax preparers. Last year, the Summit partners launched the “Taxes.Security. Together.” campaign to encourage taxpayers to take greater data security precautions and to learn how to recognize and avoid phishing emails that seek to trick people into providing sensitive data such as Social Security or credit card numbers.

    This year, the Summit partners expanded the campaign to include tax professionals, who increasingly are being targeted by criminal syndicates. Summit partners initiated a new campaign called “Protect Your Clients; Protect Yourself” and urge tax professionals to use the best security practices available. Tax professionals should review Publication 4557, Safeguarding Taxpayer Data, to see an action check-list for ensuring data security.

    As tax season approaches, the IRS and Summit partners will share more tips for tax professionals in upcoming weeks. And for taxpayers, the “Taxes.Security.Together” campaign will resume for a second year in the weeks leading up to the opening of the 2017 filing season in January with important information that taxpayers can use to protect their sensitive taxpayer and financial data.


  • 28 Oct 2016 3:23 PM | Anonymous

    IR-2016-143, Oct. 28, 2016

    WASHINGTON — The Internal Revenue Service today reminded employers and small businesses of a new Jan. 31 filing deadline for Forms W-2. The IRS must also hold some refunds until Feb. 15.

    A new federal law, aimed at making it easier for the IRS to detect and prevent refund fraud, will accelerate the W-2 filing deadline for employers to Jan. 31. For similar reasons, the new law also requires the IRS to hold refunds involving two key refundable tax credits until at least Feb. 15. Here are details on each of these key dates.

    New Jan. 31 Deadline for Employers

    The Protecting Americans from Tax Hikes (PATH) Act, enacted last December, includes a new requirement for employers. They are now required to file their copies of Form W-2, submitted to the Social Security Administration, by Jan. 31. The new Jan. 31 filing deadline also applies to certain Forms 1099-MISC reporting non-employee compensation such as payments to independent contractors.

    In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit their copies of these forms. In addition, there are changes in requesting an extension to file the Form W-2. Only one 30-day extension to file Form W-2 is available and this extension is not automatic. If an extension is necessary, a Form 8809 Application for Extension of Time to File Information Returns must be completed as soon as you know an extension is necessary, but by January 31. Please carefully review the instructions for Form 8809, for more information.

    "As tax season approaches, the IRS wants to be sure employers, especially smaller businesses, are aware of these new deadlines," said IRS Commissioner John Koskinen. "We are working with the payroll community and other partners to share this information widely."

    The new accelerated deadline will help the IRS improve its efforts to spot errors on returns filed by taxpayers. Having these W-2s and 1099s earlier will make it easier for the IRS to verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them. In many instances, this will enable the IRS to release tax refunds more quickly than in the past.

    The Jan. 31 deadline has long applied to employers furnishing copies of these forms to their employees and that date remains unchanged.

    Some Refunds Delayed Until at Least Feb. 15

    Due to the PATH Act change, some people will get their refunds a little later. The new law requires the IRS to hold the refund for any tax return claiming either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until Feb. 15. By law, the IRS must hold the entire refund, not just the portion related to the EITC or ACTC.

    Even with this change, taxpayers should file their returns as they normally do. Whether or not claiming the EITC or ACTC, the IRS cautions taxpayers not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations. Though the IRS issues more than nine out 10 refunds in less than 21 days, some returns are held for further review.


  • 28 Oct 2016 2:56 PM | Anonymous

    IR-2016-142, Oct. 28, 2016

    WASHINGTON –– The Internal Revenue Service today reminded the nation’s more than 725,000 federal tax return preparers that they must renew their Preparer Tax Identification Numbers (PTINs) for 2017. All current PTINs will expire Dec. 31, 2016.

    Anyone who prepares or helps prepare any federal tax return, or claim for refund, for compensation must have a valid PTIN from the IRS. The PTIN must be used as the identifying number on returns prepared.

    “We ask that you renew your PTIN as soon as possible to avoid a last-minute rush,” said Carol A. Campbell, Director, IRS Return Preparer Office. “It’s easy to let this slip as the holiday season approaches.”

    For those who have a 2016 PTIN, the renewal process only takes a few moments online. The renewal fee is $50. If you cannot remember your user ID and password, there are online tools to assist you. Preparers can get started at www.irs.gov/ptin. If you are registering for the first time, the PTIN application fee is $50.00 and the process may also be completed online.

    Paper Form W-12, IRS Paid Preparer Tax Identification Number Application and Renewal, is available for paper applications and renewals, and takes four to six weeks to process. Failure to have and use a valid PTIN may result in penalties. All enrolled agents, regardless of whether they prepare returns, must have a PTIN in order to maintain their status.

    Annual Filing Season Program Participation Kicks Off

    The voluntary IRS Annual Filing Season Program is intended to encourage non-credentialed tax return preparers to take continuing education (CE) courses to increase their knowledge and improve their filing season readiness. Participation generally requires 18 hours of CE, including a course in basic tax filing issues and updates, ethics, as well as other federal tax law courses. More information on the types and amounts of CE required for the program is available at www.irs.gov/Tax-Professionals/Annual-Filing-Season-Program.

    Preparers desiring to receive an Annual Filing Season Program - Record of Completion for 2017, must (1) complete their continuing education requirements by Dec. 31, 2016; (2) have a valid 2017 PTIN; and (3) consent to adhere to specific practice requirements in Treasury Department Circular No. 230.

    The IRS has a video to demonstrate how to sign the Circular 230 consent and print the Record of Completion.

    Enrolled Agent Credential

    The Annual Filing Season Program is a filing season qualification while an enrolled agent license provides professional status. The enrolled agent credential is an elite credential issued by the IRS to tax professionals who demonstrate special competence in federal tax planning, individual and business tax return preparation and representation matters.  Enrolled agents have unlimited representation rights; allowing them to represent any client before the IRS on any tax matter.  As non-credentialed return preparers consider the next steps in their professional career, the IRS encourages them to consider becoming an enrolled agent.

    Enrolled agents and participants in the Annual Filing Season Program are included in the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications created on IRS.gov to help taxpayers make wise decisions when choosing tax return preparers.

    The directory also contains information on attorneys, certified public accountants (CPAs), enrolled retirement plan agents (ERPAs) and enrolled actuaries who are registered with the IRS.

    IRS.gov has a page that explains the various tax return preparer credentials and qualifications, as well as a page with information regarding how to become an enrolled agent.


  • 27 Oct 2016 4:14 PM | Anonymous

    WASHINGTON — The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2017.  The IRS today issued technical guidance detailing these items in Notice 2016-62.

    Highlights of changes for 2017

    The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the saver’s credit all increased for 2017.

    Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions.  If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.)    Here are the phase-out ranges for 2017:

    • For single taxpayers covered by a workplace retirement plan, the phase-out range is $62,000 to $72,000, up from $61,000 to $71,000.
    • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $99,000 to $119,000, up from $98,000 to $118,000.
    • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $186,000 and $196,000, up from $184,000 and $194,000.
    • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

    The income phase-out range for taxpayers making contributions to a Roth IRA is $118,000 to $133,000 for singles and heads of household, up from $117,000 to $132,000.  For married couples filing jointly, the income phase-out range is $186,000 to $196,000, up from $184,000 to $194,000.  The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

    The income limit for the saver’s credit (also known as the retirement savings contributions credit) for low- and moderate-income workers is $62,000 for married couples filing jointly, up from $61,500; $46,500 for heads of household, up from $46,125; and $31,000 for singles and married individuals filing separately, up from $30,750.

    Highlights of limitations that remain unchanged from 2016

    • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $18,000.
    • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
    • The limit on annual contributions to an IRA remains unchanged at $5,500.  The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

    Detailed description of adjusted and unchanged limitations

    Section 415 of the Internal Revenue Code (Code) provides for dollar limitations on benefits and contributions under qualified retirement plans.  Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost of living increases.  Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415.  Under Section 415(d), the adjustments are to be made following adjustment procedures similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.

    Effective January 1, 2017, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $210,000 to $215,000.  For a participant who separated from service before January 1, 2017, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2016, by 1.0112.

    The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2017 from $53,000 to $54,000.

    The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A).  After taking into account the applicable rounding rules, the amounts for 2017 are as follows:

    The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $18,000.

    The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $265,000 to $270,000.

    The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $170,000 to $175,000.

    The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5 year distribution period is increased from $1,070,000 to $1,080,000, while the dollar amount used to determine the lengthening of the 5 year distribution period is increased from $210,000 to $215,000.

    The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $120,000.

    The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $6,000.  The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $3,000.

    The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $395,000 to $400,000.

    The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $600.

    The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $12,500.

    The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations remains unchanged at $18,000.

    The limitation under Section 664(g)(7) concerning the qualified gratuitous transfer of qualified employer securities to an employee stock ownership plan remains unchanged at $45,000.

    The compensation amount under Section 1.61 21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation remains unchanged at $105,000.  The compensation amount under Section 1.61 21(f)(5)(iii) remains unchanged at $215,000.

    The dollar limitation on premiums paid with respect to a qualifying longevity annuity contract under Section 1.401(a)(9)-6, A-17(b)(2)(i) of the Income Tax Regulations remains unchanged at $125,000.

    The Code provides that the $1,000,000,000 threshold used to determine whether a multiemployer plan is a systemically important plan under Section 432(e)(9)(H)(v)(III)(aa) is adjusted using the cost-of-living adjustment provided under Section 432(e)(9)(H)(v)(III)(bb).  After taking the applicable rounding rule into account, the threshold used to determine whether a multiemployer plan is a systemically important plan under Section 432(e)(9)(H)(v)(III)(aa) remains unchanged for 2017 at $1,012,000,000.

    The Code also provides that several retirement-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3).  After taking the applicable rounding rules into account, the amounts for 2017 are as follows:

    The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for married taxpayers filing a joint return remains unchanged at $37,000; the limitation under Section 25B(b)(1)(B) remains unchanged at $40,000; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $61,500 to $62,000.

    The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household remains unchanged at $27,750; the limitation under Section 25B(b)(1)(B) remains unchanged at $30,000; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $46,125 to $46,500.

    The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers remains unchanged at $18,500; the limitation under Section 25B(b)(1)(B) remains unchanged at $20,000; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $30,750 to $31,000.

    The deductible amount under Section 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,500.

    The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) increased from $98,000 to $99,000.  The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers who are active participants (other than married taxpayers filing separate returns) increased from $61,000 to $62,000.  If an individual or the individual’s spouse is an active participant, the applicable dollar amount under Section 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.  The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $184,000 to $186,000.

    The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $184,000 to $186,000.  The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $117,000 to $118,000.  The applicable dollar amount under Section 408A(c)(3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.

    The dollar amount under Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under Section 430(c)(2)(D) has been made is increased from $1,106,000 to $1,115,000. 


  • 02 Oct 2016 3:23 PM | Anonymous

    The IRS next spring will begin to use private contractors to collect overdue federal tax debts. Four companies have been selected to implement the new program.


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