This past month the Congress and the Obama administration passed a stop-gap tax cut package that would allow the current tax rates to continue for 2 more years, in addition to passing a 2011 payroll tax holiday, extending $1000 child tax credit and the estate tax.
While many folks are glad that an extension of the current rates was passed – even if it is temporary – there are still going to be problems as a result of how late in the year the tax package was passed. Some people will now experience tax filing delays if they itemize. Expecting a hefty refund – and were counting on it early in the year? You may be out of luck.
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Tax Filing Delays If You Itemize
Because of how late in the year the tax bill was passed (December 17th, 2010), the IRS has now announced that the estimated 50 million taxpayers who itemize their deductions will not be able to file taxes until the IRS has had a chance to update their software to account for the tax package. From CNN:
Itemize your tax deductions? Itching for a refund? You're going to have to wait.
The IRS said that it needs until mid- to late-February to reprogram its processing systems because Congress acted so late this year cleaning up the tax code. The bill, which includes deductions for state and local sales taxes, college tuition and teacher expenses, wasn't signed into law until Dec. 17.
The bill ensured that the federal income tax rates would not change, and itemized deductions will continue to be allowed in full for high-income taxpayers.
As a result, the 50 million taxpayers who itemize their deductions will have to hold off for a bit before they file. Of course, not everyone files early: only about 9 million of the 140 million U.S. tax filers filed in January or February of last year.
So those of us who itemize on our taxes, we won't be able to file until mid to late February.
UPDATE: The IRS has released a statement saying that February 14th is the day that itemizers can start filing their returns. Details here: Tax Filing Delays
On the bright side, while an estimated 50 million taxpayers itemize their taxes, of those only about 9 million usually file in January in February.
Who Does The Tax Filing Delay Affect?
The tax filing deadline basically affects anyone who will be itemizing on their taxes.
The delay affects both paper and electronic filers who itemize deductions on Form 1040 Schedule A. That includes those claiming the new Educator Expense Deduction, which credits grade school teachers for out-of-pocket expenses of up to $250.
It also includes those claiming deductions for college students, covering up to $4,000 of tuition, which is claimed on Form 8917, though the IRS said there will be no delays for those that claim other education tax credits.
If you file a form 1040 Schedule A, you'll be affected.
When Will Itemizers Be Able To File?
So while there will be a delay for itemizers in filing til mid to late February, is there an actual date that the IRS anticipates that they'll be ready to go? Not as of yet.
Though itemizers can work on their tax returns before the IRS is ready to accept them, the government said people should not send them in before it is ready to process the returns.
The IRS hasn't yet said exactly what day it will be able to begin processing the impacted tax returns, but it expects to announce that date “in the near future.”
So they don't have a date yet, but should be announcing one in the “near future”. So don't send your tax returns in yet.
Some Software Allows Itemizers To File Now
Many or most of the tax filing software are already up to date for the new tax law, and while you won't be able to get a refund until the IRS starts actually accepting returns, you can file your return with some companies already. For example, TurboTax will allow you to file your return starting January 6th.
don’t wait to start your return. TurboTax products are already up-to-date with all the latest forms and schedules. You can prepare your return with TurboTax and electronically file it beginning on Jan. 6.
TurboTax will securely hold your return until the IRS begins accepting returns impacted by the processing delays. TurboTax will send you an email confirmation that your return has been e-filed and accepted by the IRS.
Once the IRS gives the OK TurboTax will file the return, and send you an email confirmation once the return is e-filed and accepted by the IRS.
TurboTax is the software I used last year to file my taxes, and I highly recommend it. It has several different packages to choose from – I chose TurboTax Deluxe as it works nicely for my small business scenario – and Schedule C income. Check out all of your filing options at their site.
Are you itemizing your taxes this year, and were you planning on filing right away to get a refund? What are your thoughts on the delay?
This is one time that I’m glad im not itemizing this year. Just a standard return for me. Interesting how turbo tax’s software is already up to date ,but the IRS’s software is not.
Yeah, go figure that a private business would be updated before the slow moving government bureaucracy. I guess that goes to show the speed at which a business can move (because they depend on their customers) versus the government (no need to satisfy anyone).
I don’t get it? If nothing has changed, and codes have only been extended, why would there be any delay at all. I know that you don’t have the answer, but I’m just throwing the question out there. It should be as simple as a update to WordPress. :)
I think it has to do more with the new provisions of the tax bill that was passed, the 2% payroll tax holiday for 2011, rate ranges changing due to inflation, unemployment benefits being extended, etc. Despite the rates being essentially the same, there were plenty of changes.
If we owed the government money and something was wrong on our end we would just be shot out of luck. They would make sure their software was up to date to garnish our checks, but because its the almighty government they can do as they please. Selfish basterds
I wonder how many people will be so anxious to get their refund that they will sacrifice a portion of their potential return & opt for the standard deduction instead of waiting. In those cases the IRS will profit. Also because of the delay, the IRS will hold boat loads of money for another month or two & accrue interest on it. Hmmm.
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When will this country wake up and realize that, Republican or Democrat, this government has become a corrupted abomination of what it was designed by our founders to be. It is run by the wealthy bankers and corporations who regularly buy their way into the halls of power each election season. You are given the illusion of choice when you vote but when they limit the choices they control the choice. Read the Federalist papers, The Constitution and the Declaration of Independence and understand that we have come full circle. We are now faced with the exact tyranny that our founders fled from and fought for freedom from. Thomas Jefferson said that every 200 years it seems necessary for revolution. What do you think? Is it time to take our government back from these tyrannical bastards? What’s the difference between organized crime and our own government the way it currently functions? Be afraid, be very afraid! It wont be much longer before everything collapses. Every great civilization in the history of the world met its demise in much the same way. Rome is falling, be prepared.
I WON THE LOTTO(25000) SO DOES THAT HAVE ANY EFFECT ON WHY THEY THE IRS IS DELAYING MY TAXES. NORMALLY I MAKE 10000 A YEAR BUT NOW IVE MADE 36000 SO WHAT COULD BE THE PROBLEM? PLEASE HELP
You could be going from not having to pay taxes, to having to pay taxes. Did you pay taxes on your lotto winnings?