January 26, 2013
Tax refunds pushed back
IRS delays start of filing season to Jan. 30 this year
Nobody will be getting a tax return in January this year, according to the Internal Revenue Service, which pushed the date it will accept filings from Jan. 22 to Jan. 30. The deadline has been so far unchanged from April 15. Tax season began on Jan. 17 last year.
The pushback was caused by the late adoption of a Senate tax bill by the House of Representatives, which provided a host of changes to income, payroll and estate taxes.
The IRS will not process paper tax returns any earlier, and has encouraged filers to do so online, and to use direct deposit so returns are made directly to a bank account for quickest results.
The delayed legislation, related to the “fiscal cliff” crisis, has pigeonholed the IRS, as it has to accommodate its software to the changes, said Mark Curran, a tax preparer for Cortland Bookkeeping.
Some taxpayers will not be able to file returns until late February or early March, according to Federal Tax Weekly.
“The IRS needs more time to adjust its processing systems to reflect passage of year-end 2012 tax legislation,” according to the publication.
This includes taxpayers filing Form 4562, Depreciation and Amortization, Form 5695 Residential Energy Credits, and From 8839, Qualified Adoption Expenses.
“Among the many legislative changes, the most impactful one is in regard to the 2 percent increase in Social Security (FICA) tax for every working American,” Curran said. Most people are still making the same wages they were in 2012, but now their take home pay will be reduced by an extra 2 percent per paycheck.”
The American Taxpayer Relief Act of 2012 accords that under the law, the employee-paid portion of the FICA tax be increased on all wage earners from 4.2 percent to 6.2 percent beginning Jan. 1, 2013.
“Most people are probably making the same wages as last year, and the prices of things haven’t gone down 2 percent,” said Curran.
He also pointed to the preferential rate change to the capital gains tax for high-income earners as a significant change. Starting in 2013, anyone earning over $400,000 will pay a 20 percent rate, whereas the rate stayed at 15 percent for anyone earning under that.
Cortland Bookkeeping & Tax Service, located at 32 Tompkins St., has been operating for over 35 years in the city. In addition to providing tax preparation and bookkeeping services, it also handles payroll services for over 50 companies in Cortland and Tompkins counties, said Curran.
He added that he has mixed feelings about the late start to the tax season, but ultimately believes that everyone will be better served due to the delay.
Melissa Norton, office manager of the H&R Block on Groton Avenue, said she thinks people have been hesitant in the wake of the fiscal cliff deal. She has also seen plenty of upset customers over the delay.
“They need to understand, it’s not us causing it,” Norton said.
H&R Block provides for customers to file taxes through them, so that information could be kept in its host server and filed once the IRS “opens the gates,” she said.
Norton said she has been telling customers to expect returns within eight to 21 days after filing.
On the legislation, she said an “awesome difference” this year was permanently adjusting the alternative minimum tax for inflation, something that has not been done for 40 years. The federal government has instead applied one- to two-year “patches” in past years.
Part of the American Taxpayer Relief Act of 2012, the fix exempts more than 30 million taxpayers who would have been hit by the alternative minimum tax, saving taxpayers over $85 million, according to Forbes.
Norton was upbeat, calling herself a “glass-half-full” type.
“It’s going to be an awesome tax season,” she said.
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