Dec 23, 2010

Tax Filing is delayed for some due to recent tax law changes

Over 19 million Americans may have to wait to late February to file their tax returns and get their refunds

The IRS announced today that over 19 million Americans may have to wait to file their tax returns due to the late tax breaks passed by Congress this week. The IRS will need until mid to late February to change its forms and systems to accept those who were affected by three reinstated deductions:

  • those who itemize and take the state and local sales tax deduction- primarily benefiting those states that do not have state and local income taxes such as Florida (over 11 million Americans claimed this deduction in 2008),
  • those claiming the higher education tuition and fees deduction up to $4,000 of tuition and fees paid to post-secondary schools (4.57 million in 2008), and
  • teachers who deduct educator expenses for out of pocket expenses up to $250 (3.75 million in 2008)

With over 77% of Americans receiving refunds averaging $3,170, this will mean some financial hardship for those expecting the early refund. Those needing refunds are more likely to file earlier in the tax season.

The IRS encourages these taxpayers to file using software to minimize further delays as paper returns have a much higher error rate than e-filed returns. However, these delays affect both paper and electronically filed taxpayers.

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