Your tax refund may be coming a little later this year.
The IRS said this week that it won't start accepting federal tax returns until Jan. 30. That's more than a week later than the agency had planned to start, thanks to the late passage of the American Tax Relief Act on Jan. 2, which sidestepped the "fiscal cliff."So even if you electronically file your return and sign up for automatic deposit, you won't see a refund until mid-February at the earliest.The good news is that those filers who plan to take advantage of the sales tax deduction, deductions for teacher classroom expenses or higher education tuition and fees will be able to do that again this year. These popular deductions -- especially the sales tax deduction for Texans -- have been extended for two years, and the IRS should have those forms updated for use by the end of the month.In fact, most tax filers -- 120 million out of 140 million -- will be able to file starting Jan. 30.The not-so-good news is that if you plan to take the tax advantage for buying an electric car, adding solar panels to your house or adopting a child in 2012, you may have to wait until late February to mid-March to file, according to the IRS. Some 30 other tax forms are being reworked because of ATRA, including several important business forms, and the IRS says it needs time to do it."While we worked to anticipate the late tax law changes and open tax season as soon as possible, it is also important that we are able to process returns accurately and efficiently," said Clay Sanford, Dallas spokesman for the IRS. "The final law required that we update forms and instructions in addition to making critical processing system adjustments."Tax software companies, chain preparers and volunteer tax services are all gearing up before the new IRS start date, however.AARP's tax aide program, a free service open to all taxpayers regardless of age or income, will open Jan. 26 in two local libraries, said Dan Murphy, co-coordinator of the Tarrant County division. "We will prepare returns and hold them in the computer," he said. "Then we'll electronically transmit the returns when the IRS accepts them on Jan. 30."AARP will open first in the Southwest Regional Library off South Hulen in Fort Worth and the Central Library in Arlington, Murphy said. The other 40 Tarrant County sites used by the group, including most of the libraries in Fort Worth, all of the libraries in Arlington and senior centers, will open after Feb. 1, he said. To find an AARP Tax Aide location, call 211.Tax software vendors also say they're ready for tax season.TurboTax, which was used by more than 25 million filers last year, has most of the updated forms in place and will alert customers if they try to use a form not yet available, said Lisa Greene-Lewis, a CPA and blog editor for the software giant."We will hold your return and send it the second it can be accepted on Jan. 30," she said. "It's a first-in, first-out process. Get in front of the line."Greene-Lewis said TurboTax developers created two different scenarios ahead of the tax law's passage and were ready to move once it was enacted.Those affected by the delayed IRS forms are a small group, she said."Ninety percent of taxpayers will be able to file on Jan. 30," she said.This year, TurboTax has a new product developed for military families that is free until Feb. 15. The software retailer also offers free products for 1040A filers and no-cost tax advice on its website from CPAs.TaxAct, another tax-preparation software, also said it was up to date with most of the new forms and available to consumers. It is a no-cost tax prep software that can be downloaded at www.taxact.com."The three forms that will be delayed that will affect the most people are the energy credits, depreciation and general business credits," said Jessi Dolmage, spokeswoman with TaxAct. "We anticipate most of the forms will be updated by Jan. 30, but clients can still go through the interview process and fill out what they can."TaxAct will send an email alert when remaining forms are updated and ready for use, she said.Tax professionals like CPAs and enrolled agents will have to wait for updates to their software to begin preparing returns."We have a base program that allows us to send organizers to clients, but we still have to wait for updates from the IRS," said Tom Kursten, a certified financial planner and enrolled agent based in Fort Worth. "We can do a rough estimate by hand, but the actual return will be delayed this year."The IRS delay will shorten a tax season that is already condensed for tax professionals, he said."We've already felt compression of the tax season," he said. "Each year we are filing more and more extensions out of necessity."While brokerage firms are now required to send tax documents to clients in January, Kursten said they often file amended forms in March, requiring his clients to file amended returns.Another surprise for taxpayers this week likely came in your first paycheck of the year, when companies began collecting 2 percent more in payroll taxes for Social Security and Medicare after the payroll tax cut expired."We've been getting calls already this week," Kursten said.Teresa McUsic's column appears Saturdays. TMcUsic@SavvyConsumer.net
Credits and deductions
Sales tax deduction. Texans and residents of other states with no income tax will be able to deduct sales taxes if they itemize (instead of taking the standard deduction) for 2012 and 2013. Don't forget to add sales tax from the purchase of a new car, motorcycle, motor home, recreational vehicle, sport utility vehicle, truck, van, off-road vehicle, plane, boat or mobile or prefabricated home or home building materials. Finally, add in your local sales tax to the state sales tax tables to get the full deduction.
Energy savings home improvement and electric car credits. The credit covers 10 percent of the cost of qualified energy-efficiency improvements, including insulation, energy-efficient exterior windows and doors and certain roofs. Adding a high-efficiency heating and air-conditioning system, water heater or stove that burns biomass fuel also qualifies for the credit. The credit has a lifetime limit of $500 and was extended for purchases in 2012 and 2013. Be sure to keep a copy of the Manufacturer's Certification Statement and any receipts or itemized bills.
Residential Energy Efficient Property Credit. Covers up to 30 percent of the cost for a solar electric system, solar hot water heater, geothermal heat pump, wind turbine or fuel cell property. It is in place through 2016. A credit for buying an electric, lean burn or fuel cell vehicle was also extended through 2016. For more information on these credits, go to www.energytaxincentives.org.
Educator expenses. Teachers can deduct up to $250 in classroom expenses for supplies, materials, books and software. The bill extends this tax break to teachers for the next two years.
Tuition and fees. College students or parents of students can continue to deduct education expenses related to schooling, including tuition, books and other supplies up to $4,000.
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