Many people will avoid having their taxes go up this year (and most will also benefit from a reduction in the payroll tax) because of the tax code legislation passed in the waning days of the “lame duck” session of Congress in 2010. Unfortunately, one side effect of that end-of-year legislation is that the IRS systems need to be reconfigured to deal with the new law.
According to a CNN.com article, more than 50 million American taxpayers who itemize their deductions will be unable to file until mid-to-late February. This is probably not going to make a huge difference for many people, as only about 9 million taxpayers (6% of the 140 million total) actually filed in January 2010 anyway.
Reading about the delay did cause me to have a momentary fit, however, as most years I depend on my IRS refund to get me through the year. (Last year was a notable exception, as I ended up OWING a ton of money because of stock trades, but that’s another story.)
Annual tax refunds are what make living in my current home affordable, thanks to homeowner credits on property taxes and mortgage interest. And my rental properties, ever a source of frustration and an actual financial loss each month, are made whole at the end of the year by the tax implications when I file my annual tax return. So a delay is a pain in my ass, for sure.
So, should you be worried about a delay? From the CNN.com article:
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.
I checked my 2009 tax return, and sure enough, I’ve got a Form 1040 Schedule A because of my itemized deductions. Son of a bitch! Fortunately it doesn’t look like the delay will be too long — probably only a few weeks later than I’d be able to file anyway — and an official date will be announced soon.
Even better? TurboTax has announced that they will hold taxpayers’ completed returns “until the IRS begins accepting returns impacted by the processing delays.” So you can get your portion of the filing process done with as soon as you’ve collected all of your documents, and TurboTax will let you know when the IRS has gotten everything squared away and accepts your return.
Big money, big money, no whammy, STOP!