By Colleen Flaherty
Killeen Daily Herald
Members of Congress may have reached a tax compromise before the end of the year, but the last-minute deal will mean delays in certain taxpayers' ability to file as tax season approaches.
The good news is that the Internal Revenue Service on Tuesday extended this year's tax return deadline to April 18 from April 15, due to a local holiday in the nation's capital.
Because a tax code wasn't finalized on Capital Hill until Dec. 17, however, the IRS is playing catch-up. Forms and formulas for certain taxpayers affected by changes to the code are only now being processed, narrowing the newly-widened filing window.
Four groups of taxpayers will be affected. Those who opt to itemize deductions; those claiming higher education tuition and fees deductions; those claiming the educator expense deduction; and those deducting state and local sales taxes will all have to wait until mid- to late February to file, whether online or through the mail, according to information from the IRS. No firm date has been set by the IRS.
Employers and investment companies may also brush up against their Jan. 31 W-2 deadlines and Feb. 15 1099 form deadlines, for the same reasons.
That puts extra pressure on tax preparers, said certified personal accountant Jim Wilson, of Wilson Derr Thompson P.C. in Harker Heights.
"It was almost malpractice on the part of Congress to let things go that late," he said. "It's almost like if they were going to open school Sept. 1, but the textbooks didn't arrive until Aug. 25."
In the end, Wilson said, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 will mean little change between this year's tax returns and last year's.
Changes to the tax code may occur every year, but are usually completed long before New Year's. The December tax deal extended Bush-era tax cuts, and its 2 percent reduction in the Social Security tax only went into effect Jan. 1.
While certain deductions are still possible, he said, the vast majority of taxpayers' fiscal years ended Dec. 31.
Still, regional IRS spokesperson Clay Sanford said, there are things taxpayers can do between now and when they file to ease the process and ensure accurate returns.
The IRS doesn't mandate that taxpayers keep records in a certain way, he said, but they should keep track of all items that may affect their federal tax returns, including bills, receipts, invoices, mileage logs, canceled checks and other proofs of payment.
Tax records should be kept for three years, and those concerning stock transactions, individual retirement accounts and business or rental property should be kept longer.
For the first time this year, Wilson said, the IRS is mandating that tax professionals preparing 100 or more returns complete them online.
Sanford also advises individuals to file online, whether preparing returns themselves or through an agency, as refunds can be made as quickly as a week later.
As to the age-old standard versus itemized deduction question, Wilson said he recommends homeowners and others whose deductions may possibly exceed the standard deduction amount of $11,000 compute their itemized deduction total for comparison, either through a tax professional or on a 1040 Schedule A form.
For military personnel in the area, Wilson advised visiting the free Fort Hood Tax Center, located next to the Clear Creek Commissary, which opens Jan. 20.
Those who own multiple rental properties or have otherwise unruly finances may look for outside help, he said, but for the average soldier or retiree, the free service is a win-win.
Soldiers who miss the April 18 deadline due to a deployment have six months upon their return to file, Wilson said. Their spouses may file jointly without them, with an income tax-specific power of attorney, but are not required to. Working spouses are required to pay income taxes for the deployment period, even if filing upon the soldier spouse's return.
Soldiers deployed to a combat zone are not subject to income tax for the duration of the deployment.
According to information from Fort Hood's III Corps, 11,800 soldiers are currently deployed.
It is unclear how many deployed soldiers will miss the April 18 deadline. Sanford had no figures as to how the combat tax exclusion affects tax revenue regionally, but encouraged soldiers and their families to read the IRS' Armed Forces Tax Guide, which is available at irs.gov, to make the most of their benefits.
Numerous other tax guides are available for civilians at irs.gov.
For more information on the Fort Hood Tax Center, call (254) 288-7995.
To contact Wilson Derr Thompson P.C., call (254) 699-7625.
Contact Colleen Flaherty at email@example.com or (254) 501-7559. Follow her on Twitter at KDHfeatures.