Hello. Since I am filing 2 years of taxes and have to mail in my 2016 1040, can I still efile my 2017 taxes or do I need to mail them in the same envelope?
DO NOT mail them in the same envelope. One of them will almost certainly get lost if you include them both in the same mailing.
But, you can mail your 2016 return and still e-file your 2017 return. Tax years are always processed separately even if you complete them at the same time, so you don't need to also mail your 2017 return.
I did efile my 2017 return but it was rejected because the IRS could not verify my 2016 AGI...because I just mailed that one in today. So seems because they no longer use the PIN for verification and only use previous years AGI, I can't efile my 2017 return. So it seems I must mail them both in separate envelopes.
In the case of when you didn't actually file your 2016 yet, you should be able to enter "0" as the AGI for the e-file verification and that should allow you to e-file.
If that doesn't work - sometimes the IRS verification for this is a bit funky and, at this point in season, since you have to mail 2016 anyways, it might be easiest to also mail 2017. But, in separate mailings.