Refunds delayed by late changes in federal tax laws

Taxpayers expecting a refund from their federal income tax this year will have to wait longer than usual.

The delay was caused when majority Democrats in Congress delayed passage of an extension of the Bush tax cuts until late December in the lame duck session after the Nov. 2 election.

Because of the delay, the U.S. Internal Revenue Service has reported it needs more time to revise tax forms and instructions. In addition, the IRS tax software needs to be revised, tested and released to the public for use before the IRS can begin accepting tax returns.

The IRS has announced it won’t begin processing returns until Feb. 14. All of the returns that have been sent to the IRS electronically or mailed have been piling up with a backlog.

The backlog is expected to delay the refunds even more. Just how long is anyone’s guess.

Taxpayers due a refund or who have itemized will have to wait longer than normal for a refund.

Three changes to IRS rules were included in three measures that were approved on Dec. 17. they included the Tax Relief Act extending Bush tax cuts, Unemployment Insurance Reauthorization and the Job Creation Act of 2010.

People claiming any of these three items involving the state and local sales tax deduction, higher education tuition and fees deduction, educator expenses deduction will experience delays in refunds. Anyone who itemizes deductions on Form 1040 Schedule A also will have their refunds delayed.

To minimize errors, the IRS has urged taxpayers to use e-file instead of paper tax forms to minimize confusion over recent tax changes and ensure accurate tax returns.

People using e-file for these delayed forms can get a head start because many major software providers have announced they will accept these returns immediately. The software providers will hold the returns and then electronically submit them after the IRS systems open on Feb. 14 for the delayed forms.

The IRS reports people using commercial software can check with their providers for specific instructions. Those who use a paid tax preparer should check with their preparer, who also may be holding returns until the updates are complete.

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