<p>Somehow I missed this until someone at work mentioned it today, but I don't quite understand it. What new information is going to be coming out in mid to late February for itemizers?</p>
<p>50</a> million itemizers can't file taxes before mid-February - Dec. 31, 2010</p>
<p>It looks like an issue that would mostly impact people waiting for tax refunds -- it says that IRS won't be ready to process returns until later, but at least one private company - TurboTax -- says that they are all ready to handle the preparation part:
[quote]
Meanwhile, TurboTax said its customers can e-file with the company as early as Jan. 6, and it will hold onto the filings until the IRS is ready to process them.
[/quote]
So they'll have their commercial software ready, even if IRS doesn't have its own final forms and software set up. </p>
<p>It's probably mostly a logistical issue with tax forms -- the official 1040 (and the software that meshes with it for e-filers) needs tinkering for various types of deductions that were in doubt until the tax law passed Congress in December. But the CPA's & tax software people know what the law provides -- so they'll be able to take down the info and account for it properly, even if they don't yet know what line number IRS will assign to it for the coming year.</p>
<p>It doesn't really have to do with refunds, but with three specific areas of the tax law that were changed in December by Congress. The IRS needs time to reprogram their computers to handle the new laws, and they won't be done until mid to late February.</p>
<p>So if you:</p>
<ul>
<li>itemize deductions</li>
<li>claim the Higher Education Tuition and Fees Deduction</li>
<li>are a teacher who claims the Educator Expense Deduction</li>
</ul>
<p>then you need to wait to file your return. If you don't do any of these, you can file whenever you want.</p>
<p>H&R Block is able to get the return ready as well, then they will transmit when the IRS will accept. Essentially, if you file a schedule A you need to wait, but most tax prep companies don't think it will take the IRS until the end of February. They did this a few years ago and were able to accept returns by end of January.</p>
<p>My accountant told me yesterday he can't complete my S-Corp taxes yet because his tax software isn't up to date. He uses Quick Books. So even though most of the commercial software is ok for individuals, some people will have to wait for companies to catch up on the changes to corporate taxes.</p>
<p>We do itemize and claim the Higher Education Credit, so we definitely fall into the "wait" category. So are the forms/tables/instructions going to change between now and the end of February, or is it simply that the IRS can't handle our return yet? In other words, can I go ahead and prepare my return and then wait for the green light to file? Or do I need to wait until further notice before I can even prepare the return?</p>
<p>I think it's possible that the forms you download from the IRS site will change, but I think that the software like Turbotax will be fine. They know what the new law says, they just don't know yet what line number IRS will put it at on their forms. So they can easily set up their software to take down the information, hold the return, and push out an upgrade to the software that automatically will put the right info on the right page and form of the return. (It's an easy fix -- let's say that the Turbotax software has temporarily been coded to put the Higher Education Credit on line 49 of the 1040, where it was last year..... but lets say that IRS ends up sticking it on line 51 this time around. The software coders simply go in and rewrite their code to redirect the stuff for line 49 to 51-- and everything is filed correctly).. This is important because so many people e-file these days -- IRS usually doesn't see actual paperwork, just a series of numbers transmitted electronically and assigned to specific fields.</p>
<p>Thanks, calmom. I know this makes me a dinosaur, but I still do my own taxes by hand. I think I'll go ahead and get my pencil copies ready, and then finalize them when the new forms become available, making sure I get the numbers on the correct lines.</p>
<p>Yes, definitely make sure the stuff ends up on the right lines. IRS has a nasty habit of sending letters claiming that you owe more money when stuff accidentally gets written on the wrong lines, usually a couple of years down the road when you have a hard time finding the form as it is. That's why I went to e-filing awhile back -- I was tired of having to point out that the income they claimed hadn't been reported was in fact reported, just on a different line than they expected.</p>
<p>
[quote]
I know this makes me a dinosaur, but I still do my own taxes by hand.
[/quote]
I think both TaxAct and TurboTax allow you to do your taxes on-line for free. Give it a try, you might like it.</p>
<p>I used to use a giant spreadsheet and fill in the forms by hand. One year I decided to give a program (TaxAct) a try, it was only $20. I'll never go back to doing it by hand. You don't have to e-file if you don't want to, they all print out the forms if you want.</p>
<p>^^</p>
<p>Well, not quite by hand hand. What I meant was that I don't file online, and don't use a program or an accountant. I have an Excel spreadsheet which I set up years ago and which I tweak every year if necessary; all I have to do is drop in the current numbers. When it's time to fill out the actual form, I use the IRS's fillable pdf and then print and mail. Our taxes are pretty straightforward, just the basic Schedule A stuff and, these days, the higher education credit. Once I've assembled the documents, the whole thing takes about an hour, start to finish.</p>
<p>"Once I've assembled the documents, the whole thing takes about an hour, start to finish."</p>
<p>I'm with you - I do it myself. I have been doing it by "hand" hand, but just the other night was looking at the IRS's fillable forms.<br>
I've never been able to understand why people pay so much money to have someone else do their taxes. For most people, like LasMa said, it's pretty straightforward - a few itemized deductions, education tax credit, and that's about it. It's really not rocket surgery! The hardest part (unless you're organized all through the year) is assembling all the receipts and other documents, which you have to do ANYWAY, even if you're having someone else do the forms. Filling out the forms themselves is not hard, and the math involved is very basic.</p>
<p>(I probably should think about learning to set up and use a spreadsheet. My computer skilz are certainly not the greatest...)</p>
<p>I had a CPA for years doing my taxes and paid him far more than necessary (around $600 for the task) -- but I liked just having someone else taking care of it --also I would get notices from IRS questioning something or another, and I'd just pass the stuff on to my tax guy, and he'd take care of everything from there. So basically I was paying for the convenience of having someone else to deal with task that I could have done, but didn't want to be bothered with. I knew I was paying more than I needed to, but it was worth it to me for peace of mind, especially during the years my d was in college and I needed to have the taxes filed early for FAFSA and IDOC. </p>
<p>I'd note that I'm self employed so possibly a little more prone to running into IRS questions or an audit. I felt it was helpful to have someone watching my back on that -- that is, I could be confident that business deductions were properly accounted for.</p>
<p>Unfortunately my CPA passed away last year (cancer).... and I didn't learn of that until June -- my last contact had been in March when I emailed him to ask him to file for an extension and let me know if I owed money to IRS. When I didn't hear back from him I thought all was fine -- but it turned out that it wasn't, so I had to rush to file my own taxes in June, and of course I owed penalties for late payment of taxes. So I'm back to doing things on my own -- though no longer under the gun to meet FAFSA / IDOC deadlines.</p>
<p>I work for a CPA and he does the entire family's at no charge.
No more rushing to do FAFSA or CSS Profiles for me with any Freshmen applicants with estimates & then changing them & making corrections. </p>
<p>I am so happy to have two returning students with deadlines in March!
Feels like a breath of fresh air!</p>
<p>Here's my situation... We filed for an extension to do our taxes. The college wants signed copies of our 1040 forms in order to proceed with our FAFSA. So does this mean we can send in a 1040 form, signed, with our estimated numbers? What do people do when they filed for extensions and are waiting for financial aid to help with upcoming tuition fees? Thank you for your reply.</p>
<p>^ I think calling the college to present your situation and ask what you should do is the best answer. Colleges have different solutions for the same issue. Good luck!</p>