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A look at why some people can't file taxes until Feb. 14

Thursday, January 27, 2011

Some people might be filling out tax forms along with valentines on Feb. 14.

Due to federal law changes, the Internal Revenue Service (IRS) announced this month it wouldn't start processing tax returns with itemized deductions -- as well as a few other deductions -- until mid-February.

Bob McCrary, owner of Le Mars Tax and Accounting, said the delay was created to allow the IRS time to reprogram its computer systems according to the tax law changes enacted by Congress in December.

People who have to wait to file include:

*Taxpayers who claim itemized deductions on Schedule A. Itemized deductions generally include charitable deductions, medical expenses, property taxes, mortgage interest, and state and local taxes.

* Taxpayers claiming the Higher Education Tuition and Fees Deduction. This deduction exists for parents and students, covering up to $4,000 of tuition and fees paid to a post-secondary institution. The deduction is claimed on Form 8917. There will be no delays for parents and students who claim other education credits, including the American Opportunity Tax Credit and the Lifetime Learning Credit.

*Taxpayers who claim the Educator Expense Deduction. This includes K-12 teachers who want to deduct up to $250 of their personal expenses for classroom materials. This deduction is claimed on Form 1040, Line 23 and Form 1040A, Line 16.

According to the IRS, about 50 million people itemize on their tax returns.

McCrary said about one-third to one-half of the people he works with on tax preparation chose itemized deduction.

So far, he hasn't seen too much of an impact of the Feb. 14 delay.

"A lot of people don't have all their information yet, so it hasn't become an issue for those people yet," McCrary said.

That might change by next week, when most of people will have their W-2 forms and tax documents, he added.

"It'll be an inconvenience more than a hassle for them," McCrary said.

Tax preparers like McCrary will also have to work with the delay as they face the April deadline.

"It pushes the whole thing back," McCrary said.

The shift isn't likely to be significant, he added.

"People that have more detailed tax returns usually wait longer anyhow," McCrary said. "The people that just have a W-2, they get in here yesterday and they get it done."

The same trend seems to be true nationally. While about 50 million people itemize deductions, only about 9 million tax returns filed before Feb. 14 last year used any of the three types of deductions in question.

This year is also different because taxpayers have slightly longer than usual to file their 2010 tax returns and pay any taxes due.

The deadline was pushed back three days to Monday, April 18, because Emancipation Day, observed in the District of Columbia, falls on Friday, April 15, 2011, which would usually be the filing deadline.

According to law, District of Columbia holidays have the same weight federal holidays do in terms of tax deadlines.

This year, the IRS anticipates more than 140 million individual tax returns will be filed.

McCrary's advice?

"Don't wait until the last minute," he said.

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