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IRS to Start Processing Itemized Returns on Feb. 14

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Washington, D.C. (January 20, 2011)

By Michael Cohn

Valentine’s Day will turn into Tax Day as the Internal Revenue Service plans to begin processing tax returns delayed by last month’s tax law changes on Feb. 14.

On Thursday, the IRS reminded taxpayers affected by the delay that they can begin preparing their tax returns immediately, however, because many software providers are ready now to accept these returns.

Beginning Feb. 14, the IRS said it would start processing both paper and e-filed returns claiming itemized deductions on Schedule A, the higher education tuition and fees deduction on Form 8917 and the educator expenses deduction. Based on filings last year, about 9 million tax returns claimed any of these deductions on returns received by the IRS before Feb. 14.

The IRS said a few weeks ago that it would delay tax returns with itemized deductions as well as a number of forms after Congress’s December extension of the Bush-era tax rates (see IRS Says Tax Season Will Be Delayed for Some and IRS Delays More Forms for Filing This Season).

People using e-file for these delayed forms can get a head start because many major software providers have announced they will accept these impacted returns immediately. The software providers will hold onto the returns and then electronically submit them after the IRS systems open on Feb. 14 for the delayed forms. Taxpayers using commercial software can check with their providers for specific instructions. Those who use a paid tax preparer should check with their preparer, who also may be holding returns until the updates are complete.

Most other returns, including those claiming the Earned Income Tax Credit, education tax credits, child tax credit  and other popular tax breaks, can be filed as normal, immediately.

The IRS said it needed the extra time to update its systems to accommodate the tax law changes without disrupting other operations tied to the filing season. The delay followed the Dec. 17 enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which extended a number of expiring provisions, including the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.

4 Comments

This delay is disturbing in that the IRS does not have back up procedure to migrate back to previous generations of software programs. Their Contingency planning should be investigated .

Due dates for filing taxes should be extended to align with IRS processing delays and a revised :2011 IRS e-file Refund Cycle Chart" should have been published by now.

Posted by: benusmc | February 3, 2011 8:07 AM

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Troy,

The publication is referring to the removal of the limitation on total itemized deuctions due to high AGI. In 2009, if a taxpayer's AGI was over $83,400 single/$166,800 mfj, their itemized deductions were reduced. This provision is no longer in effect for 2010.

Cameron J. Pribble, CPA

Posted by: cameronpribble | January 21, 2011 2:52 PM

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I did not see any mention of removing either floors.

Posted by: kpdg17 | January 21, 2011 8:21 AM

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IRS Pub 17, p. 3 published Dec 8, 2010 states that taxpayers will no longer loose part of their itemizeddeductions based on AGI thresholds. However, on p 140 (adobe p. 142) it makes clear that the 7.5% medical and 2% AGI miscellaneous floors remain intact for 2010. This appears to be contradictory. I found an new IRS reg. that covered in detail the elimination of the floors. However, I can't find the guidance anymore! I would think that lifting of the 7.5% floor would have been major news and I'm beginning to wonder if lack of sleep this tax season has affected my sense of reality. Seriously, I am positive that I read specifically about the 7.5% and 2% floor elimination only a few days ago. Any help with clarification would be greatly appreciated. Thanks, Troy Bryant Doorstep Tax Service of Atlanta, LLC tbryant@doorsteptax.com 404.786.6309.

Posted by: jtroyj | January 20, 2011 8:02 PM

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