Long gone are the days when we could watch the economy in other continents suffer while we sat immune.
Jan. 28--Poll: When do you file your tax returns?
Millions of taxpayers who have their W-2s and are ready to file returns will have to wait a little longer for refunds this year.
The IRS will not start accepting tax returns until Wednesday, eight days later than the original date. Congress approved changes to the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act on Dec. 17, leaving the IRS with little time to update tax forms to reflect the changes for 2012.
"Normally we would file returns as early as last week, but we have already met with some of our clients who can't even file electronically until Jan. 30," said Don Pyne, a certified public accountant and senior partner with Pyne, Waltrip, Decker & McCoy LCC in Ventura. "There are certain forms the IRS won't even have until mid-February and March. This year will be a very busy one for us."
Most returns, including those claiming education tax credits and the Earned Income Tax Credit, can be filed at the end of this month. Those using more complex forms might have to wait longer. This group includes people claiming residential energy credits, depreciation of property or general business credits, Pyne said.
Most taxpayers in this group typically file closer to the April 15 deadline or obtain an extension, IRS officials said.
Although most of the legislation enacted last month to avoid the "fiscal cliff" won't affect 2012 tax returns, other changes could affect some families and individuals, financial experts said.
California residents in higher income brackets will see their 2012 income tax rates rise 1 percent to 3 percent as a result of Proposition 30, approved by voters Nov. 6 to help fund education. Prop 30 also increased the state sales tax by a quarter-cent, beginning in 2013.
This year, taxpayers with individual retirement accounts still have some time to make tax-free transfers to eligible charities, which could still count for the 2012 filing year.
The tax-free transfers, which were supposed to have expired Dec. 31, have been extended until the end of this month.
Although the IRS has pushed back accepting tax returns, it expects nine of 10 taxpayers to receive refunds in 21 days or less if they file electronically, said Lisa Greene-Lewis, lead CPA with the American Tax and Financial Center for TurboTax. Taxpayers should start their E-files now and use direct deposit as an option, she said.
"There's no need to wait until the 30th," Greene-Lewis said. "You want to be the first in line for transmission since tax returns are processed on a first-in, first-out basis."
To make filing go smoothly, taxpayers should make sure they use correct Social Security numbers for each dependent, Greene-Lewis said.
The Child Tax Credit can be worth up to $1,000, while the Earned Income Tax Credit can be worth up to $5,800 for a family with three children. The Dependent Care Credit can be worth up to $2,100.
"These are huge tax credits, which help taxpayers keep more of the money they're entitled to," Greene-Lewis said.
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