Changes in 2011 taxes

by Courtesy of Mayor Carla Parks Thompson Falls
| January 5, 2011 12:47 PM

According to Terry Stevens, the new manager at Bratz & Associates, CPAs, more than a few taxpayers may have a delay in the filing of their 2010 tax returns. The start of the 2011 Income Tax filing season is here for the majority of taxpayers. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 were signed into law on December 17th, 2010. According to the IRS Commissioner Doug Shulman, there will be a delay of processing of the following types of returns, as the IRS is in the process of reprogramming their processing systems.

The following taxpayers will need to wait until mid to late February to file their returns for the following categories:

1) Taxpayers claiming itemized deductions on Schedule A, which includes mortgage interest, charitable deductions, medical and dental expenses as well as state and local taxes. The state and local general sales tax deduction was extended under the new act, for people living in areas without state and local income taxes.

2) Taxpayers claiming the Higher Education Tuition and Fees Deduction for parents and students, covering up to $4,000 of tuition and fees paid to post-secondary institutions as claimed on form 8917. The IRS emphasized that there will be no delays for those claiming other education credits, included in the American Opportunity Tax Credit and Lifetime Learning Credit.

3) Taxpayers claiming the Educator Expense Deduction of out-of-pockets classroom expenses up to $250 as claimed on Line 23 of the 1040 and Line 16 of the 1040A. This deduction is for kindergarten through grade 12 educators.

As part of this effort, the IRS will be working closely with the tax software industry and tax professional community to minimize delays and ensure a smooth tax season.

Terry added that as with any income tax advice, he recommends that you seek competent professional tax help. A number of rules have changed for tax preparation this year and the tax professionals at Bratz and elsewhere have been challenged to learn all of the new law. “We have been a busy crew getting ready for this season. The late passage of the bills adds much material to learn and learn quickly before the season begins. Our goal is to keep our clients informed by providing them with professionals who stay up-to-date on the current IRS issues.”