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Tuesday, May 3, 2016

Tax filing delay causes confusion

Wednesday, January 26, 2011

Richard Irby

Staff Writer

"Are you kidding me?"

"What do you mean I can't file my taxes right away?"

Those are the type of comments tax preparers are hearing from citizens who want to file their taxes, but are learning they are going to have to wait until mid to late February.

"People who itemize are a little upset about the filing delay, but there's nothing we can do about it," said John Ed Welch of Hughes, Welch and Milligan CPA's.

Most people have their W-2 forms from employers by now and many are interested in filing their taxes and getting their refunds.

If you are filing a 1040A or 1040EZ "short" tax form, you are welcome to file any time. The IRS says filing electronically (e-filing) using direct deposit will result in the quickest processing and refund.

Those who file a more complex, itemized tax return are the ones facing a delay.

The problem is the big year end debate in Congress over Bush administration tax cuts, which were set to expire on Dec. 31st.

While lawmakers argued over whether to end the tax cuts for the wealthy and renew them for middle class citizens, the IRS had to wait for a decision so it would know how to reprogram its computers to process itemized returns.

Congress finally decided to leave all of the tax cuts in place, President Obama signed the bill into law on Dec. 17 and the IRS could finally get started on its big reprograming job.

The IRS now says it will be mid to late February, at the earliest, before its computers will be ready to process itemized tax returns or have updated printed forms for itemizers who want to file by mail.

"I've never heard of a delay like this," said Welch. "We can still figure returns and tell people what to expect, what their returns are going to be. But we will have to wait until the IRS gets updated tax forms online to input information and wait for approval."

According to Welch, there is one good thing about the tax filing delay for itemizers. Congress has been increasing the standard deduction so more people now file the simple, short form, and not as many people itemize as they used to.

Welch worries that more people who urgently need their tax return and face the filing delay will be tempted to go to companies who offer Tax Anticipation Loans.

"I certainly don't recommend that," said Welch. "In my opinion, those companies are a rip-off, because they charge exorbitant fees (cutting into the refund amount taxpayers actually receive). It's like dealing with a loan shark."

Any taxpayer who claims itemized deductions on a Schedule A form faces the filing delay.

Taxpayers claiming the Higher Education Tuition and Fees Deduction or the Educator Expense Deduction are also in the filing delay category.

Even though filing is on hold for some, the 2010 tax paying and refund season is under way.

The IRS began processing simple e-filing returns on Jan. 14.

Employers must deliver W-2 forms to employees and former employees by Feb. 1.

April 18 is the tax filing deadline this year, instead of the usual April 15 deadline. That is because the District of Columbia will observe its Emancipation Day holiday on the 15th and Washington D.C. holidays impact tax deadlines in the same way federal holidays do.

In a strange tax year when there is a filing delay for some and a changed filing deadline, Welch expects many people to seek an extension, instead of filing their returns.

"We do a lot of extensions, probably 100 every year in the Salem office," said Welch. "The filing delay may cause more extension filings than usual."

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