Now that the tax deal is done, we can all breathe a sigh of relief and start thinking about the upcoming tax-filing season, right?
Not so fast.
Since Congress waited so long to ink the final deal -- in the form of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which wasn't signed into law until Dec. 17, 2010 -- tax season might start a little later for some taxpayers. The IRS has indicated that even though tax forms are available for most filers, the agency will not be able to begin processing returns as early as planned.
How many taxpayers will be affected? Statistically, about one-third of all filers itemize their deductions. On a sheer numbers basis, that works out to about 50 million taxpayers. Several million more taxpayers who claim non-itemized deductions, such as the Higher Education Tuition and Fees Deduction and the Educator Expense Deduction that were reinstated as part of the deal, are also expected to experience filing delays.
Some preparers have been setting up work arounds in anticipation of the delays. Turbo Tax has announced that taxpayers who use its software will be able to e-file when ready. TurboTax promises to hold your return until the IRS begins accepting returns affected by the processing delays. You'll receive an email once the return is e-filed and accepted.
The bottom line is that if you're traditionally an early filer, you'll need to exercise a little patience this tax season. The rest of us should be fine. Doug Shulman, Commissioner of the IRS, has assured us: "The majority of taxpayers will be able to fill out their tax returns and file them as they normally do."
Let's hope so.