While the late December tax cut extension slowed down the beginning of tax season for some, it brought a welcome degree of certainty to the tax landscape.

"Now, for two years, we at least know what our tax system looks like in a general sense," said Leon LaBrecque, managing partner of investment management firm LJPR LLC. "We can continue to look at dividends and capital gains with special rates; we can plan for our tax bill and make decisions based on at least some certainty."

Bob Scharin, senior tax analyst for the Tax & Accounting business of Thomson Reuters, agreed. "Taxpayers who made Roth IRA conversions are faced with an option when they file their 2010 returns. They can have their income from the conversion taxed in 2011 and 2012, or they can elect out of that deferral and have it taxed in 2010 instead," he said. "The extension legislation gives people more certainty regarding the 2011 and 2012 rates, so they should be more comfortable taking advantage of the tax deferral and not worry that the deferral will cause them to be taxed at higher rates in 2011 and 2012."

A delay in the start of tax season for some resulted from the late passage of the legislation, the Tax Relief, Unemployment Insurance Re-authorization and Job Creation Act. Generally, taxpayers who claim the higher education tuition and fees deduction or who claim the educator expense deduction will have to wait until mid-February to file their returns. The IRS said that the delay would impact about 9 million taxpayers.

"It also impacted the itemized deduction for state and local sales tax," noted Barbara Weltman, a tax attorney and contributing author to J.K. Lasser's Your Income Tax series. "The option to itemize state and local sales tax is on Schedule A."

"Taxpayers may be surprised that their preparers are required to file electronically," she noted.

The Internal Revenue Service noted that it is approaching the milestone of 1 billion returns processed electronically. And with the e-file mandate in place, this goal should be reached in the near future. In 2010, nearly 100 million people - 70 percent of taxpayers - used IRS e-file.

"Preparers will have some adjustments to make this filing season, especially those who have not adopted e-file across the board," said Jody Padar, chief executive officer of New Vision CPA Group. "Many practitioners are not prepared for that."

A RAL RETREAT

This tax season, the changing face of bank products is becoming evident as fewer refund anticipation loans are available, and the Treasury is issuing its own prepaid debit cards for taxpayer refunds.

The Treasury is sending letters to about 600,000 low- and moderate-income individuals around the country offering them the opportunity to have a MyAccountCard Visa Prepaid Debit Card. There will be no cost to have a tax refund loaded onto the card, which will also offer free point-of-sale transactions, free online bill pay, free cash withdrawals at more than 15,000 ATM machines nationwide, and free cash back at participating retail stores.

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