Last-minute tax code changes last December have delayed the start of tax season, but the Internal Revenue Service is ready to begin processing returns on Monday.
With that in mind, tax officials are reminding expected filers of some changes as they begin to prepare their 2010 returns.
Peggy Riley, regional spokeswoman for the IRS, said one of the biggest changes is the discontinuance of mailing tax forms as another way to encourage online filing. Taxpayers can still file on paper, but they now have to request forms through their local IRS office or by calling 1-800-829-3676.
Most other changes are individualistic and depend on a taxpayer’s filing status, but Riley said the biggest challenge, both this year and historically, is reaching those eligible for the Earned Income Tax Credit.
“This is geared toward low-income families and working individuals who earn less than a certain amount [$48,362],” she said. “Four out of five people claim this, but we’re always trying to reach the rest. It’s a refundable credit of up to $5,600, so that can be a big boost for folks.”
Another change deals with first-time homebuyer’s credit, which was created first as a no-interest loan in 2008 and then extended as a refundable credit for 2009 and part of 2010. Riley said those that took the loan of $7,500 in 2008 must begin repaying in 2011 at a rate of $500 per year.
As more and more people file their returns electronically — either through the IRS’ free e-file service or with software programs such as Turbo Tax — fewer people are relying on professional preparers. However, Riley said taxpayers that have a lot of exemptions or itemized deductions or those that operate small or home-based business still rely on professional help. The IRS spokeswoman said filers should make sure their tax preparers are credible.
“All [preparers] should now have a federal ID number, which helps us weed out the unscrupulous preparers,” Riley said. “Anyone can set up shop in February claiming to be a tax preparer, but if there are any problems with a return, the burden falls on the individual.”
Late filers also have some extra time in 2011. The usual deadline of April 15 falls on a Friday, but it is also Emancipation Day, celebrated as a holiday in Washington, D.C. That pushes this year’s deadline to Monday, April 18.
Additional information on tax changes for 2010 returns is available online at www.irs.gov.