Tax season has some notable changes

The start of this tax season will be delayed for some taxpayers, while others can look forward to larger deductions and exemptions starting next year, the Internal Revenue Service recently announced.
The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 signed into law by President Obama on December 17 extended the Bush-era tax cuts for two more years. As a result of three provisions that were extended in this bill some taxpayers will have to wait until at least mid-February before they will be able to begin filing their tax returns.
This is a result of the tax systems having to be reprogrammed to include these changes to the law.
“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.
He added that the IRS is doing everything it can to reduce the impact of these changes by working “through the holiday and into the new year” to reprogram their computers and ensure a “smooth tax season.”
January will still be the start of the filing season for a majority of taxpayers. Those who will be delayed by these changes are those claiming itemized deductions on Schedule A, the higher education tuition and fees deduction or the educator expense deduction. The IRS will announce when they will be able to begin processing returns from those affected by the changes.
Until then the effected taxpayers can have their tax forms prepared, but they cannot be sent in. The last day to file taxes is April 18 in 2011 due to a holiday on the 15th.
The recently signed law also raised some standard deductions and personal exemptions while some tax brackets were broadened due to inflation. By law, the dollar amounts for many provisions must be raised to keep up with inflation. These provisions do not affect returns until next year’s tax season.
Eight tax provisions were modified or extended by the law. Standard deductions for singles and married couples will be raised between $50 and $200, the taxable income threshold separating the 15 percent bracket from the 25 percent bracket will rise $1,000, the maximum earned income tax credit (EITC) for low and moderate income workers will rise $100 and the maximum income limit for the EITC will be raised almost $700.
For more information on these changes and other tax-related questions visit IRS.gov.

More from Around New York