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When to File your 2010 Income Tax Return

Taxpayers have until April 18, 2011 to file 2010 Form 1040s. That's a few extra days. April 15 falls on a Friday and its Emancipation Day in the District of Columbia. Pennsylvania Form PA-40 is due on April 15.

Officially, tax season begins on January 14, 2011. That's when IRS e-file opens to accept electronically filed returns and when Free File becomes available. You can use Free file if your income is $58,000 or less at www.Irs.gov.

Not so fast! Since Congress passed the tax legislation at the 11th hour (December 15) the IRS needs time to revamp its processing systems to accommodate the late changes made to the law. If you are one of the taxpayers listed below, you must wait to file until mid to late February 2011:

• Taxpayers who itemize their deductions. Itemized deductions include the deduction for medial expenses, mortgage interest, state and local taxes, and charitable deductions. The IRS estimates the this will affect about one-third of all filers ora bout 50 million taxpayers..
• Taxpayers claiming the Higher Education Tuition and Fees Deduction. This deduction covers up to $4,000 of tuition and fees for post-secondary education. It c an be taken by the student, or by the parents if they are paying the college expenses and claim the student as a dependent.
• Taxpayers claiming the Educator Expense Deduction. This deduction is for teachers who deduct out-of-pocket expenses for items for classroom use up to $250.

The delay applies to both paper and electronic filers. The IRS advises that affected taxpayers start working on their returns but that they should not submit their returns until the IRS announces a specific date on which it can begin processing the returns. Returns filed before that date will be rejected and will have to be refiled.

In addition, returns that include the following forms cannot be electronically filed until the IRS gives the "all clear:"

Form 3800, General Business Credit
Form 4684, Casualties and Thefts
Form 5405, First-Time Homebuyer Credit and Repayment of the Credit (Page 2)
Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit
Form 8834, Qualified Plug-in Electric and Electric Vehicle Credit
Form 8859, District of Columbia First-Time Homebuyer Credit
Form 8910, Alternative Motor Vehicle Credit
Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit

The IRS no longer mails tax packages to individuals or businesses. Taxpayers can still get any forms and instructions they need online at www.IRS.gov, or they can visit local IRS offices or participating libraries and post offices.

If you are one of the affected taxpayers and you like to file your return as soon as possible, you're going to have to exercise a little patience this year. Its not the IRS's fault. Even though Congress had ten years to clean up the tax mess, they didn't enact legislation until the last minute.

Delaying the filing date will also delay the receipt of a refund for many taxpayers. Taxpayers who are owed refunds are more likely to file early.

The delay will have some far-reaching consequences. Revenue projections and the time of its receipt by tax preparers must be revised. Public companies in the tax prep. business will see earnings projections unmet. Some mortgage lenders are no longer accepting 2009 tax returns as proof of income, and loan approval may be delayed until 2010 returns are processed.

While you are waiting to file your return, make sure you are taking advantage of all available deductions and credits. Don't forget that you can contribute funds to your traditional or Roth IRA by the first deadline of a tax return, without any extensions. That means you can make a retroactive 2010 IRA contribution if you fund the account by April 18, 2011. For 2010 and 2011 the dollar limited for IRA contributions are $5,000 if you are 49 or younger, $6,000 if you are age 50 or older.

IRS advises people that the fastest way to get their refund is to file electronically and use direct deposit. After you file your return, you can track the status of your refunds by using the "Where's My Refund?" tool, located on the front page of www.IRS.gov. Taxpayers can generally get information about their refunds 72 hours after the IRS acknowledges receipt of their e-filed returns, or three to four weeks after mailing a paper return.

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Spencer Law Firm LLC
320 Race Ave
Lancaster, PA 17603

Toll Free: 866-639-5451
Phone: 717-207-7935
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