‘Tax Season’ delayed for few those who plan to claim under itemized deductions

There have been two important things related to start and end of this year’s tax season. By now you all must be aware that the deadline to submitting our tax returns has been extended by three extra days this year. Instead of 15th April you have time till 18th April 2011 to file your 2010 tax returns or apply for extension. This extension has been carried out due to a local holiday in State of Columbia which is followed by weekend holiday. The start of tax season has also been delayed for some of the tax payers who are palling to claim itemized deductions in Form 1040 or 1040A.

Usually tax filing process begins in the month of January itself; this year has been no exception. However there have some late changes in the provisions of income tax laws which require some time to get incorporated in the electronic system of filing returns. This delay would not have happened if most of the people were filing their returns through the traditional paper filing method. But now over 70% of Americans are using the electronic medium to e-file their income tax returns it is very important to update the system before the filing process could begin. Computer professionals have been working day and night to make the necessary changes in their system as early as possible. They would also require some time to test these changes before finally giving it a go ahead so that taxpayers at large do not face any problems.

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Number of Taxpayers will have to wait to file their returns

There have been some recent changes in the tax laws which were accepted by congress and signed by the President in |December 2010. As these changes will have to be incorporated in the electronic version of processing tax as well IRS authorities will need some time in making sure this incorporation was carried out in time. As these changes will be applicable for tax year 2010 all those who will be effected by them have no choice but to wait little more before filing their returns.  IRS has already issued information on this delay for some of the tax payers and is also expected to inform soon by when the online system will be updated.

Most of these changes are on account of provisions for claiming itemized deductions in form 1040A. In case you do not have any claims under itemized deductions in Form 1040A this delay is not going to affect you, and you can go ahead and e-file your returns. More specifically these deductions are in the items related to:

  • Schedule A:  Claims in Schedule a on account of medical and dental expenses, charitable deductions, deductions on account mortgage interest will need to wait little more.
  • Higher Education Fee: Parents claiming to Higher Education Tuition Fee credits need to wait further. Under the new provisions a qualifying taxpayer could claim up to $ 4000 on account of post secondary tuition fee paid for their child.
  • Educator Claims: Taxpayers who which to claim tax credits under Educator Scheme using Form 1040 or 1040A will also need to wait before the online system is updated.

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Internal Revenue Service opens Free Filing on Jan 14th

Year 2011 will be the ninth year in a row where taxpayers will have the facility to file their returns online on official website of the Internal Revenue Service department. The IRS has already started accepting the online returns for the tax year 2010 since Jan 14th 2011. Taxpayers those who are ready with their returns can visit this website and file their income tax returns. Individuals and married filing jointly with earning of less than $ 58,000 in 2010 can file their returns for free through ‘Free File’.

Free File saves both your money and time and is the easiest way to file your tax returns. Free File software is a good example of public and private partnership. This software guides you through the entire process of preparing and submitting your tax returns. This is also proving a good tool for youngsters who are filing their returns first time and are already friendly with computers. In a country where most of the working population is young it is a very helpful tool to introduce this segment to the tax regime. There are many different software available in the market to suit different set of taxpayers. One can browse the internet and go through the features of these software before identifying which one will suit them the best. The 2011 version of these software are even more user friendly and updated with the latest provisions of IRS. You will find it very easy to use them and file your tax returns on time.

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Repayment time for first time home buyers credit

It is such a nice feeling to have your own home, your own dream home. One has to put lot of efforts and energy to make their dreams come true. In past few year when the economy was not doing well it had become more difficult to maintain steady source of income and it seemed the dream of owning a home would be still at some distance. This period witnessed another phenomenon which saw property prices came crashing down. In budget terms the home of your dreams would be closer but big question was will you be able to retain your earning levels.

Government came to rescue for many such people those who could buy homes at reduced prices but were not sure of their future income levels. Also developers who were building these homes were stuck with huge investments in their projects and construction activity throughout the country was bought to a standstill. IRS launched a scheme in 2008 according to which Americans those who were buying their homes for the first time could avail special income tax credits.

For those who availed the benefits from this scheme must start repaying these credits from 2010 onwards. That means returns to be submitted in 2011 should included repayment of such credits. These credits are to be repaid within a time period of 15 years commencing from year 2010. IRS has already sent reminders to taxpayers those who have availed this scheme. Repayment has to be reported by using Form 5405.

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