TaxAlerts Tax Article
January 2011 | Written by: Karen Reed, EA
The good news is that the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was finally passed in December. We have two more years of lower income tax rates and AMT relief, as well as extensions of several popular tax breaks and incentives.
A result of the legislation passing so late in the year is that an estimated nine million taxpayers will be affected by IRS delays in tax return processing. If you plan to take advantage of the Educator Expenses Deduction, file a Schedule A to claim itemized deductions, or avail yourself of the Tuition and Fees Deduction for higher education expenses, the IRS will not be ready to process your tax return until February 14th.
In general, it makes sense to wait until February to file your taxes. Companies and other employers have until January 31st to issue W–2s and all the different 1099 forms, and financial institutions generally have until February 15th to mail out their tax reporting documents. The information you receive is also reported to the IRS, and if your reported income does not match their figures, you will likely be sent a notice seeking an additional amount of tax or an explanation for the mismatch. Before you file, it’s always a good idea to check your records to make sure all of your income is included on your return.