Itemizers Will Have to Wait
Following recent tax law changes, the Internal Revenue Service has said the upcoming tax season will start on time for most people, but taxpayers affected by three recently reinstated deductions will have to wait until mid- to late February to file their individual tax returns. In addition, taxpayers who itemize deductions on Form 1040 Schedule A will need to wait until mid- to late February to file as well.
Changes in the law mean that the IRS will need to reprogram its processing systems to accommodate tax breaks included in the compromise tax bill, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, that became law on December 17, 2010.
People claiming any of these three items — involving the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction, as well as those taxpayers who itemize deductions on Form 1040 Schedule A — will need to wait to file their tax returns until tax processing systems are ready, which the IRS estimates will be in mid- to late February.
"The majority of taxpayers will be able to fill out their tax returns and file them as they normally do," said IRS Commissioner Doug Shulman. "We will do everything we can to minimize the impact of recent tax law changes on other taxpayers. The IRS will work through the holidays and into the New Year to get our systems reprogrammed and ensure taxpayers have a smooth tax season."
The IRS will announce a specific date in the near future when it can start processing tax returns impacted by the late tax law changes. In the meantime, people in the affected categories can start working on their tax returns, but they should not submit their returns until IRS systems are ready to process the new tax law changes.
The delay in filing means millions of people will have to wait longer to get their refunds next year. Of course, without the tax law changes, those same millions would be receiving much lower refunds than before, if any at all.
Taxpayers who will have to wait to file include the following:
First, taxpayers claiming itemized deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses, as well as state and local taxes.
In addition, itemized deductions include the state and local general sales tax deduction extended once again in the new tax law, which primarily benefits people living in areas without state and local income taxes and is claimed on Schedule A, Line 5.
Because of late Congressional action to enact tax law changes, anyone who itemizes and files a Schedule A will need to wait to file until mid- to late February.
Next are taxpayers claiming the Higher Education Tuition and Fees Deduction. This deduction for parents and students — covering up to $4,000 of tuition and fees paid to a post-secondary institution — is claimed on Form 8917.
However, the IRS emphasized that there will be no delays for millions of parents and students who claim other education credits, including the American Opportunity Tax Credit and Lifetime Learning Credit.
And finally, there are taxpayers claiming the Educator Expense Deduction. This deduction is for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250. The educator expense deduction is claimed on Form 1040, Line 23, and Form 1040A, Line 16.
For those falling into any of these three categories, the delay affects both paper filers and electronic filers. However, the use of e-file instead of paper tax forms will help minimize confusion over the recent tax changes and ensure more accurate tax returns.
As part of the effort to make tax season run as smoothly as possible, the IRS will be working closely with the tax software industry and tax professional community to minimize delays and ensure a smooth tax season.
Updated information will be posted on IRS.gov. This will include an updated copy of Schedule A as well as updated state and local sales tax tables. Several other forms used by relatively few taxpayers are also affected by the recent changes, and more details are available on IRS.gov.
