tax law changes delay 2010 filings?

[robbase]

I thought the tax law changes only had to do with extending the tax rates for the next 2 years and lowering SS deduction for next year??? But I guess they also "brilliantly" slipped in some retrocactive stuff that will delay tax filing / IRS ability to process itemized returns?

articles.latimes.com/2010/dec/29/business/la-fi-tax-refund-delay-20101229

[8 Bit WWBG]

...:::"The IRS said taxpayers can minimize any confusion over the tax-law changes or extensions by filing electronically using commercial tax-preparation software or the e-file system available through the agency's website at www.irs.gov.

Tax-software vendors routinely provide customers with updates that reflect changes in the law. Chances are the software will be ready long before the IRS is ready to process returns.":::...

The article is unclear whether the use of commercial software will allow early filers to get their proper refund. Just because turbotax has the rules programmed properly does not mean there won't be a disconnect if the computer on the IRS side disagrees.

I don't depend on getting my refund early early, but I don't want to wait until April either. Guess February it is...

[moneywhisperer]

My DD was trying to get an electronic PIN & that service too is hung up for a month or two.

[phil5185]

You guys get REFUNDS??

[wvugurl26]

I really have no idea if I'm getting one but if I do get one its bc I switched jobs mid year to a much higher paying one. I've been withheld at that job like I've made that all year which isn't the case. And yes, I know you can adjust withholdings but my HR/payroll people are the definition of incompetent. I almost didn't get my first check bc they lost all of my initial paperwork.
Although thanks for reminding me I need to call my last employer and give them a new address to send my W2 to. Not sure if my forwarding order's still good.

[8 Bit WWBG]

I personally would not have been able to balance out the refund/pay equation because we decluttered our house BIG time and I have thousands of dollars worth of charitable donations that I am not sure how they will be valued. I will definitely be using turbotax and "its deductible" though because I don't know if the IRS will believe that anyone could own as many books and clothes as we gave away.

[The J]

My tax situation has had significant changes each year for the last couple of years. I've upped my exemptions, but I'm probably still looking at a refund in the 1k+ range. Plus, you may end up with unexpected changes, like WWBG (and I as well, since I've been decluttering).

[phil5185]

would not have been able to balance out the refund/pay equation because we decluttered

tax situation has had significant changes each year

LOL - does 'change' make it necessary to err on the overpay side rather that the underpay side?

[The J]

yes, since these changes reduce my tax liability, so I want to stay within the safe harbor provisions.

[phil5185]

so I want to stay within the safe harbor provisions

.

That would be the 'want', what is the 'why'?

[wvugurl26]

I'm not sure of the federal penalty rate but in WV its 9%. None of my investments are making me 9% right now.

[The J]

Because the potential penalties outweight the interest I would earn.

[phil5185]

the potential penalties outweight the interest I would earn

Maybe. But a lot of people avoid underpayment because of an (irrational) fear of 'penalties'. The IRS rate is 3% - and that is applied only for the quarter that you were 'under'. And only on the 'underage' beyond $1000. On the occasions that I have paid it, the IRS sends me a bill in about Sept/Oct. In my case, the earnings have always outweighed the penalty.

[❤ mollymouser ❤]

Confession: we get a refund.

[kristi28]

The IRS decided to waive the penalty that we should have owed ($18) one year, as we had a change in situation (DD was born). I don't see anywhere that they have to do that, but they did. I also will owe this year, but the penalty (if we end up owing one) is small enough that I don't worry too much about it.

Our HR people are also incompetent, and they cannot manage to process a change in my federal tax information without a corresponding change in the state info. With the child tax credit in limbo so long, it was difficult to determine if we had the right amount withheld.

[TrixAre4Kids]

I'm getting a refund too!

[Deleted]

I thought I read that unless you were affected by the tax changes, the programming didn't matter.

One of the ones delaying IRS processing is if you claim the $250 teacher supplies deduction. It's nice that Congress acknowledges that teachers spend their own $$$ in the classroom. Sure, my students don't need those cheery yellow valances I bought for $10 on CraigsList, but an attractive classroom is an incentive to learning. They also don't need kleenexes when the back of their arm will do <g>.

[wvugurl26]

Out of curiosity sake I tried to find a calculator to estimate my taxes. Based on that I'll owe a couple hundred to feds. Not sure about the state.
Have to research how they are treating unemployment for 2010. That could chop another couple thousand off AGI.

[wvugurl26]

And the federal rate is one thing at 3% but our state rate bites. There's some whole complicated deal by quarter to figure it out that I don't remember off the top of my head. The guy who did my grandma's taxes the year my grandpa died royally screwed them up but based on her owing ~$2k she owed a heck of a penalty. I gave her the appropriate old age credits, cleaned up some other stuff and was able to safe harbor it for state. You could say he roughed in the return for me

[Deleted]

Our finances are too complicated to file early, anyway- I wish we could. I suppose I could make a good guess from the year-end statements on our 2 brokerage account but I can never figure out what to use as Gross income from my year-end pay stub- probably Gross minus 401(k) contributions minus Medical Spending account contribs plus imputed income for company-paid life insurance- maybe if I have some spare time I'll go back and figure it out from last year's pay stub vs. W-2. At this point I couldn't tell you if we owe or we're getting a refund.

[robbase]

I guess I am wondering why they wait 'till late Dec to pass tax stuff that effects the same year???

[❤ mollymouser ❤]

We don't waste our refund.

[emptypockets]

If your tax return is affected by any of the new tax changes signed into law on/about December 28, then, yes, you need to wait to do the final filing as it is supposed to give you a higher refund, so work on your return until the new changes have been progammed into the IRS computers and your return reflects any of these change to benefit you. These new changes do not affect us, as we are retired, so we will file as early as possible to get it done and off our to-do list. If you need to check out the new tax changes, try IRS.gov or MSN website or some other tax web page.

[❤ mollymouser ❤]

My goal is to file on January 15. I met that goal the past two years, and I'm hoping for three in a row.

[WannabeWealthy]

Aren't tax returns not accepted until Feb 15th?

[emptypockets]

depends if you are mailing in your tax return by snail mail or filing electronically, and who is filing it electronically for you. Don't know when IRS will be electronically processing; maybe I should check the irs.gov website.

[8 Bit WWBG]

...:::"That would be the 'want', what is the 'why'? ":::...

The short answer, and/or the one you want to hear/will believe anyway is "because I'm not as disciplined or savvy as you".

The real answer is that at this point its not like I can change last year. I'm going to get a refund, and its going to be much bigger than many of the "you're stupid for loaning the government money interest free" people could ever accept. Nevertheless, it works for me, for now. Yes mathematically I would have done better getting "my money, now" and putting it in an interest yielding investment. I have not done this because the last year has proven that the second additional money was available, it went to a vet bill, a dinner out, or general consumption. Yeah yeah, pay yourself before you even see it, yah yah. Even putting it in a "separate account and forgetting about it" does not mean its not there.

I am not yet sure if DF and I will wed this year or next, so we will have to start running the numbers and consider how each situation would work for us. Her employment situation might fluctuate around June, so I would have to check if/when that happens and recalculate. I know that for some, this becomes an obsession trying to get it right at 0, and I just plain don't want to deal with that.

I would rather get a small refund, than overpay. The amounts in question are not large enough where retaining a bit more of my money for a bit longer is going to make it worth the trouble involved in nailing the numbers that close.

[❤ mollymouser ❤]

We lose approximately $40 in interest (assuming we would've banked/saved 100% of it) if we didn't opt for not adjusting our withholdings and getting a refund. We're ok with that. (Besides, the government needs the money! )

[moneywhisperer]

robbase - and I am wondering why the IRS released the programming changes before the legislature was done with it's job. they could have developed & held the release until they knew. more wasted $s to undo stuff they should have anticipated could change significantly.