(article) IRS says 50 million must delay filing

[❤ mollymouser ❤]

(excerpt)

50 million taxpayers must delay filing - IRS
By David Goldman, staff writer
December 31, 2010: 11:14 AM ET


NEW YORK (CNNMoney) -- 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.

"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 in a statement. "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 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.


LINK TO FULL STORY: money.cnn.com/2010/12/31/pf/taxes/irs_filing_delay/index.htm?hpt=T2

[marvholly]

I am one of the 50 million because I always need to itemize. NOT fun when you are unemployed and even the measly $100-200 i get back makes a BIG impact.

[ShoreEA]

I agree, molly. Blame Congress for dragging their feet on the tax bill for so long.

[TheOtherMe]

Very true about Congress. I'm another one who can't file as early as I would like because I itemize my deductions.

[teen persuasion]

The article is poorly worded. It implies that the $250 teacher deduction is an itemized deduction, but that has not been true in the past.

We don't itemize, but DH is a teacher, so we'll have to wait. DD might also have to wait - she takes the college credits.

[Savoir Faire-Demogague in NJ]

Depending on how complicated one's returen is, and if you have a 1099 from a brokerage firm, one should not file their taxes prior to March anyway.

[commentator]

Here is what the IRS says on this topic {Source: www.irs.gov/newsroom/article/0,,id=233449,00.html} --

**BEGIN QUOTE**
Taxpayers will need to wait to file if they are within any of the following three categories

• 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 in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 enacted Dec. 17, 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.
  
  
• 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.
  
  
• 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.
  
  

**END QUOTE**

[❤ mollymouser ❤]

Well that sucks. We have charitable deductions, so we itemize. Grrrrrrrr.

[❤ mollymouser ❤]

I can't imagine it takes the federal government THAT long to redo the computer programs for the changes, and suspect that they are "pulling a California" and intentionally delaying the start of filing season for 50 million (many of whom may be getting refunds) ... so that they get to keep that money a bit longer.

[commentator]

Molly, the feds allow themselves to have deficit spending. They don't have to pull California tricks to balance the budget because they don't have to balance the budget.

I will be surprised if they're ready by March 1st.

[dragonfly7]

Meanwhile, since my parents have to itemize their taxes and will be affected by this delay, I'm hoping my sister's university extends its FAFSA deadline beyond February 14.

[commentator]

Rules may have changed in the past 10 years or so but when I did FAFSA for my college aged kids the tax return didn't need to actually be filed, just completed.

[❤ mollymouser ❤]

I guess I'm just skeptical. But if a law changed on Dec 17, why does it take the IRS more than 30 days to change the computer programs to deal with this? (That would be January 17). And 60 days? (February 17) .... this just seems astonishingly inefficient.

[teen persuasion]

Know what else has been delayed? The forms themselves, at least at our library. We've had so many patrons coming in and calling, looking for the forms (since they won't be mailed out this year). We've got all the state forms in (for about a week now), but the only Fed forms we have are the 1040EZ instructions.

I always tell the patrons they can go to the IRS website, but they invariably are people w/o computers or internet access.

[taxref]

The time involved to program the computers and to produce forms is probably not surprising for those who have been preparing taxes in recent years. For several years now, late congressional approval of "extenders" (popular tax provisions which have to be reinstated by congress every year or so) has caused problems for the IRS and tax software companies.

This year, however, huge portions of the tax code were subject to sunset provisions. I must agree with Commentator that the IRS is facing a huge task.

[TheOtherMe]

Turbo Tax sent off my tax return with a Schedule A yesterday and it has been accepted by the IRS, so the delayed returns are being processed.

[❤ mollymouser ❤]

My CPA called this afternoon and said our return was accepted by the IRS.... finally.

[philly1]

Got my Federal refund this morning! ;D

[TheOtherMe]

As did I. Now have both the federal and the state. It was good of Turbo Tax to let customers put the tax returns in a queue. The processing didn't delay my refund.

[whoisjohngalt]

Depending on how complicated one's returen is, and if you have a 1099 from a brokerage firm, one should not file their taxes prior to March anyway.

Why?

[Clever Username]

Quote: Depending on how complicated one's returen is, and if you have a 1099 from a brokerage firm, one should not file their taxes prior to March anyway.





Why?

I think she means similar to my other thread. I just got my Smith Barney tax docs.

[ksguy]

Ok, so I'm confused. I itemize my deductions so can I go ahead and file or do I have to wait until next week?

[mwcpa]

ks. you can file today.... IRS has reprogrammed there computers to address all of the 12th hours changes in the 2010 tax law by Congress