When Congress passed the American Taxpayer Relief Act of 2012 on January 2, 2013 (read the contradiction there), most taxpayers breathed a sigh of relief. The tax rules for 2012 and 2013 were now known and for most taxpayers, and many of the deductions and credits they've come to know and love were extended. Accountants, on the other hand, knew life wasn't so rosy.
For one, the IRS just started accepting and processing individual income tax returns as of January 30th. This is two weeks later than most taxpayers are accustomed to filing. Secondly, the IRS announced that they would be delaying refunds to help avoid scams and fraudulently filed tax returns. In the past a taxpayer could expect their electronically filed tax refund directly deposited into their bank accounts in about ten days. The IRS is stating it can take up to twenty-three days to get the refunds in 2013.
To add insult to injury, many forms that taxpayers need to file their returns are in the process of being updated by the IRS. Once the forms are updated, tax software vendors will be able to update their systems as well. This week, the IRS announced that it will start processing Form 8863 for Education Credits starting on February 14th. Therefore, any taxpayer with a child in college who plans to receive the American Opportunity Credit, will have to wait until Thursday, at the earliest, to file. Other forms are not slated to be available until the end of February/beginning of March. They include:
- For individuals: Form 3800 – General Business Credit and Form 8582 – Passive Activity Loss Limitations.
- For businesses or individuals that have flow through activities: Form 3800 General Business Credit; Form 8582 – Passive Activity Loss Limitations; Form 5884 – Work Opportunity Credit; Form 8903 – Domestic Production Activities Credit; and Form 6765 Credit for Increasing Research Activities.
- Click here for a complete list of forms that are delayed
Take solace in the fact that even though many forms are not available yet, taxpayers can choose to extend their returns using Form 4868 (individuals) or Form 7004 (businesses or trusts). Remember that an extension of time to file is not an extension of time to pay. If you think you'll owe taxes when your return is filed, you need to estimate your tax and pay any deficiencies by the tax deadline.
Have questions about calculating your tax due or help wading your way through the tax law? Post a comment below or contact our Tax Planning & Preparation Group at 440-449-6800.