IRS Delays Start of Filing Season for Taxpayers With Itemized Deductions

[MichaelB]

Taxpayers who claim deductions for home-mortgage interest, gifts to charity and state and local taxes will have to wait until middle to late February to file their 2010 returns.
The Internal Revenue Service attributed the late start of the filing season to changes in tax law for 2010 that were finished last week. The agency needs extra time to put processing systems in place, the IRS said today.
“The majority of taxpayers will be able to fill out their tax returns and file them as they normally do,” IRS Commissioner Douglas Shulman said in a statement. “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 delay also applies to filers preparing to take advantage of a deduction for college tuition and fees of up to $4,000, and a separate $250 deduction for teachers’ out-of- pocket classroom expenses.

IRS Delays Start of Filing Season for Taxpayers With Itemized Deductions - Bloomberg


This is not a surprise, but is still unfortunate.

 

[kyounge1956]

How much will that really delay anyone? I never get my W-2 until the end of January anyhow.

 

[Alan]

How much will that really delay anyone? I never get my W-2 until the end of January anyhow.

I agree, plus REIT fund statements come late in February.

 

[LOL!]

I always file in October after getting an extension. Will this affect me? I think not.

Actually, it would be interesting if the IRS said, "No refunds until October." I imagine then that folks would not overwithhold and the amount of refunds would be reduced.

 

[MichaelB]

My kids will be delayed. Just earned income, no investment transactions, no itemized deductions. They have excess tax withheld and usually get a nice refund.

The ones that will be affected the most are the ones that benefit the least from and are most inconvenienced by the delay.

 

[kyounge1956]

My kids will be delayed. Just earned income, no investment transactions, no itemized deductions. They have excess tax withheld and usually get a nice refund.

The ones that will be affected the most are the ones that benefit the least from and are most inconvenienced by the delay.

If your kids aren't itemizing, what will delay them? Are they taking the deduction for college tuition?

 

[W2R]

This is unexpected, and good to know. Thank you, MichaelB.

 

[MichaelB]

If your kids aren't itemizing, what will delay them? Are they taking the deduction for college tuition?

You're right. Brain fart. Must be the holiday stress.

 

[jazz4cash]

Another reason to not count on getting a big refund.

 

[TromboneAl]

Another reason to pay off your mortgage.

 

[Nords]

How much will that really delay anyone? I never get my W-2 until the end of January anyhow.

I guess that would depend on whether or not one was getting a W-2 in the first place!

 

[kyounge1956]

How much will that really delay anyone? I never get my W-2 until the end of January anyhow.

I guess that would depend on whether or not one was getting a W-2 in the first place!

Oops! I think I assumed people who get their income from non-job sources wouldn't be itemizing. But you're right, that wouldn't necessarily be the case.

 

[aaronc879]

I've never been able to itemize and never will so doesn't affect me any.

 

[Nords]

I've never been able to itemize and never will so doesn't affect me any.

On a more serious note, charitable contributions combined with other deductions may put you over the top.

 

[kyounge1956]

On a more serious note, charitable contributions combined with other deductions may put you over the top.

Maybe or maybe not. Given aaronc879's ultra-lean budget, I think the only thing he could deduct on Schedule A is his property taxes ($900), and any medical insurance/expenses above 7.5% of his AGI. Since the budget doesn't list medical, let's say (for purposes of discussion) that his medical deduction is the same amount as property tax. The standard deduction last year for a single was $5700, so he'd have to have charitable deductions of almost a third of his total income, to get to a $5700 bottom line on Schedule A.

My base budget after retirement will be significantly higher than his, but I wonder if it will even be worth my while to itemize, because I'll have only property tax, health insurance above the limit, and charitable donations too. I think for me it will be pretty close to a wash, but I suspect all the real über-frugals in the forum would be better off taking the standard deduction.

 

[veremchuka]

hum, not sure what to make of this. typically aarp does free tax prep for those over 60 but the appts are in mid feb at the local library and when done they file electronically. i paid off my mortgage in mid june so with only 6 mortgage payments this year and paying off chunks last december and in january then march, my balance was dropping fast. i suspect the interest paid all total in 2010 may not allow me to itemize so maybe there's no impact on me. i've never been in this position before so it's all up in the air due to that. for 2011 going forwards i'll never itemize again.

thanks for the info.

 

[harley]

I itemize and always owe something, although I try to keep it near break even. But I never mail it off until 4/15 anyway. I like to go to the tax protest parties. Good food, beer, music, and crazy people. So it won't effect me.

 

[Arnie]

I do not quite understand the cause for the delay. Were the changes that complicated or so late being agreed to or both or what?

 

[REWahoo]

Late.

The IRS has to revise forms, schedules and instructions, update websties, and get everything printed to incorporate all the last-minute changes.

I have to imagine all the tax software folks (TurboTax, etc.) area scrambling as well.

 

[Arnie]

But is there something specific in the recent tax changes dealing with "deductions for home-mortgage interest, gifts to charity and state and local taxes"?

 

[REWahoo]

Yes and no to your question. Google "summary of 2010 tax law changes" and see what you find.

 

[Arnie]

I'll have to do that, but not any more tonight. In my ignorance, I had assumed the changes were related to 2011 so the delay didn't make sense. Thanks.

 

[HFWR]

...all the last-minute changes...

Your government's efficiency...

In their defense, I saw Megaconglomocorp do this with alarming regularity. Some project is "shovel ready", cue the extended "hem-haw" period, then "oh shite, expedite". Damn the cost overruns, full speed ahead!