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Filing season delayed for some

By Kay Bell · Bankrate.com
Monday, January 3, 2011
Posted: 12 pm ET

If you want to file your 2010 taxes early this year, you might be out of luck.

The IRS is not quite ready to handle every tax return because Congress took so long to pass tax legislation that applies to the 2010 tax year.

So the IRS is telling taxpayers who itemize or who claim a couple of tax deductions directly on their Form 1040 or 1040A that they must wait until mid- to late-February to file their returns.

That's how long the IRS figures it will take for it to reprogram its computers to reflect the laws that were enacted as part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 that became law Dec. 17, 2010.

The delay will affect three categories of tax filers:

  1. Taxpayers claiming itemized deductions on Schedule A. The main issue this year is the state and local general sales tax deduction. That tax write-off expired at the end of 2009 but was retroactively extended for the 2010 tax year as part of the December legislation. Now the IRS is working on the 50 states (plus Washington, D.C.) sales tax tables that are used to claim this deduction on line 5 of Schedule A.
  2. Taxpayers claiming the higher education tuition and fees deduction. This deduction, known as an above-the-line deduction because it appears in the section of Form 1040 and Form 1040A that's just above the line where a taxpayer's adjusted gross income is entered, could provide a deduction of up to $4,000 for qualifying tuition and fees paid to a post-secondary institution.
  3. Taxpayers claiming the educator expense deduction. This above-the-line deduction, also on Form 1040 and Form 1040A, is available to kindergarten through grade 12 teachers and other educators who spend their own money on classroom supplies. It's worth a deduction of $250.

"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 announcing the partial filing season delay.

He's right. Most people claim the standard deduction instead of itemizing, and those folks can start filing their returns as soon as they're ready.

And a lot of folks, regardless of which deduction method they use, don't file their returns until later in the season anyway.

As for those who must wait this year (including itemizing me!), the IRS will announce the specific date that we can start sending in our returns as soon as it figures out what that is.

Meanwhile, Shulman suggests that we go ahead and work on our taxes so that we can drop them in the snail mail or e-file them as soon as the IRS is ready to process them.

And in case you're inclined to blame the IRS, don't. The onus is squarely on Congress, which had months to deal with expired 2010 tax laws, but kept putting off the job.

One piece of good news, though, is that when lawmakers finally got around to reinstating the laws, they made them effective for 2011, too, so we won't have to deal with a filing season delay next year.

Make sure you get all the latest tax news and tips this filing season by subscribing to Bankrate's free Daily Tax Tip newsletter.

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