Many taxpayers planning to file their 2010 tax returns early have been advised by IRS to cool their heels and wait until mid- to late-February, 2011. Affected taxpayers are those planning to file Schedule A, or claim above-the-line deductions for higher-education tuition and fees or educator expenses. The culprit is Congress’s late passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the 2010 Tax Relief Act). IRS said it needs time to reprogram its computers to reflect the 2010 Tax Relief Act’s changes.
Taxpayers affected by the hold-up are those claiming:
- Itemized deductions on Schedule A. What’s holding things up is the choice to deduct state and local general sales and use taxes instead of state and local income taxes. This election was extended for 2010 and 2011 (along with the deductions in (2) and (3), below) by the 2010 Tax Relief Act. Because of late Congressional action to enact tax law changes, IRS says anyone who itemizes and files a Schedule A will be affected.
- The above-the line deduction for higher education tuition and fees. This deduction of up to $4,000 of tuition and fees paid to a post-secondary institution is claimed on Form to arrive at adjusted gross income (AGI) and is claimed on Form 8917 (Tuition and Fees Deduction). However, IRS noted that there would be no delays for taxpayers claiming other education credits, including the American Opportunity Tax Credit and Lifetime Learning Credit.
- The above-the-line deduction for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250.