Since the 2010 Tax Act was passed so late in the year, the IRS is having to delay the start of processing for some returns, since their systems have to be updated. While most returns can begin being processed pretty much immediately in January, there are some that will have to be delayed for processing until sometime in mid- to late-February.
The three specific areas that will cause the delay are:
- Taxpayers claiming itemized deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses, as well as state and local taxes. In addition, itemized deductions include the state and local general sales tax deduction extended in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The primary benefit is for folks who live in areas without state and local income taxes and is claimed on Schedule A, Line 5.
- Taxpayers claiming the Higher Education Tuition and Fees Deduction. This deduction for parents and students – covering up to $4,000 of tuition and fees paid to a post-secondary institution – is claimed on Form 8917. However, the IRS emphasized that there will be no delays for millions of parents and students who claim other education credits, including the American Opportunity Tax Credit and Lifetime Learning Credit.
- Taxpayers claiming the Educator Expense Deduction. This deduction is for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250. The educator expense deduction is claimed on Form 1040, line 23, or Form 1040A, line 16.
For those that fall into these categories, whether filing electronically or on paper, returns will not be processed until mid- to late-February.