With the tax season beginning this month, there are two key items to note: Taxpayers have until April 18 to file their tax returns and recent tax legislation can affect those Washington taxpayers claiming itemized deductions. Those may include state and local taxes as well as the educator expense deduction and higher education tuition and fees deduction.
Taxpayers will have until April 18 to file their 2010 tax returns and pay any tax due because Emancipation Day, a holiday observed in the District of Columbia, falls this year on April 15. By law, D.C. holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have three extra days to file this year. Taxpayers requesting an extension will have until Oct. 17 to file their 2010 tax returns.
For most taxpayers, the 2011 filing season starts on schedule. However, tax law changes enacted by Congress and signed by President Obama in December mean some people need to wait until mid- to late February to file their tax returns to give the IRS time to reprogram its processing systems.
Some taxpayers -- including those who itemize deductions on Form 1040 Schedule A -- will need to wait. This includes taxpayers impacted by any of three provisions that expired at the end of 2009 and were renewed by the law enacted Dec. 17. Those who need to wait include:
Taxpayers claiming itemized deductions on Schedule A -- Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses as well as state and local taxes. In addition, itemized deductions include the state and local general sales tax deduction that was also extended and which primarily benefits people living in areas without state and local income taxes. Because of late congressional action, anyone who itemizes and files a Schedule A will need to wait to file until mid- to late February.
Taxpayers claiming the higher education tuition and fees deduction -- This deduction for parents and students -- covering up to $4,000 of tuition and fees paid to a post-secondary institution -- is claimed on Form 8917. However, the IRS emphasized there will be no delays for millions who claim other education credits, including the American Opportunity Tax Credit extended last month and the Lifetime Learning Credit.
Taxpayers claiming the educator expense deduction -- This deduction is for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250. The deduction is claimed on Form 1040, Line 23 and Form 1040A, Line 16.
In addition to extending those tax deductions for 2010, the law also extended those deductions for 2011 and a number of other tax deductions and credits for 2011 and 2012 such as the American Opportunity Tax Credit and the modified Child Tax Credit, which help families pay for college and other child-related expenses. The act also provides various job creation and investment incentives including 100 percent expensing and a two-percent payroll tax reduction for 2011. Those changes have no effect on the 2011 filing season.
The IRS will announce a specific date in the near future when it can start processing tax returns impacted by the recent tax law changes. In the interim, taxpayers affected by these tax law changes can start working on their tax returns, but they should not submit their returns until IRS systems are ready to process the new tax law changes. Additional information will be available at www.IRS.gov.
For taxpayers who must wait, the delay affects paper filers and electronic filers. The IRS urges taxpayers to use e-file instead of paper forms to minimize confusion over the recent changes and ensure accurate returns.
Except for those facing a delay, the IRS will begin accepting e-file and Free File returns on Jan. 14. The IRS also reminds taxpayers that using e-file is the best way to ensure accurate tax returns and get faster refunds. Additional details about e-file and Free File will be announced later this month.
David Tucker handles media relations for the IRS for the states of Washington, Alaska and Hawaii.