IRS Offers Tips to Help Taxpayers with the January 30 Tax Season Opening

The IRS will begin processing most individual income tax returns on Jan. 30 after updating forms and completing programming and testing of its processing systems. The IRS anticipated many of the tax law changes made by Congress under the American Taxpayer Relief Act (ATRA), but the final law requires some changes before the IRS can begin accepting tax returns.
The IRS will not process paper or electronic tax returns before the Jan. 30 opening date, so there is no advantage to filing on paper before then. Using e-file is the best way to file an accurate tax return, and using e-file with direct deposit is the fastest way to get a refund.
Many major software providers are accepting tax returns in advance of the Jan. 30 processing date. These software providers will hold onto the returns and then electronically submit them after the IRS systems open. If you use commercial software, check with your provider for specific instructions about when they will accept your return. Software companies and tax professionals send returns to the IRS, but the timing of the refunds is determined by IRS processing, which starts Jan. 30.
After the IRS starts processing returns, it expects to process refunds within the usual timeframes. Last year, the IRS issued more than nine out of 10 refunds to taxpayers in less than 21 days, and it expects the same results in 2013. Even though the IRS issues most refunds in less than 21 days, some tax returns will require additional review and take longer. To help protect against refund fraud, the IRS has put in place stronger security filters this filing season.
After taxpayers file a return, they can track the status of the refund with the “Where’s My Refund?” tool available on the IRS.gov website. New this year, instead of an estimated date, Where’s My Refund? will give people an actual personalized refund date after the IRS processes the tax return and approves the refund.
"Where's My Refund?" will be available for use after the IRS starts processing tax returns on Jan. 30. Here are some tips for using "Where's My Refund?" after it's available on Jan. 30:

• Initial information will generally be available within 24 hours after the IRS receives the taxpayer’s e-filed return or four weeks after mailing a paper return.
• The system updates every 24 hours, usually overnight. There’s no need to check more than once a day.
• “Where’s My Refund?” provides the most accurate and complete information that the IRS has about the refund, so there is no need to call the IRS unless the web tool says to do so.
• To use the “Where’s My Refund?” tool, taxpayers need to have a copy of their tax return for reference. Taxpayers will need their social security number, filing status and the exact dollar amount of the refund they are expecting.

How Low Are U.S. Taxes Compared to Other Countries?

By Derek Thompson | The Atlantic – Fri, Jan 18, 2013 1:49 PM EST

No, the U.S. is not a high-tax country. But saying exactly how not-high-tax we are gets a little tricky.
The graph at the top of this article comes from a KPMG report excavated by Henry Blodget. It shows personal tax rates on $100,000 around the world. The U.S. comes in at 55th out of 114.
As for the richest one or two percentiles of earners, we come in at practically the same place: 53rd-highest. Reminder: The fiscal-cliff tax hike kicks in about $100,000 above this level.


But these numbers might understate how low taxes have been in the U.S. Unlike most advanced economies, the U.S. don't supplement personal income taxes with a national sales tax, or value-added tax (VAT). Consumption taxes accounted for about a fifth of total U.S. revenue in 2008 (mostly at the state and local level) compared to an OECD average of 32 percent. In other words, the U.S. relies uniquely on personal tax rates to raise revenue -- and we have relatively low personal tax rates.

The best way to answer the question "Are U.S. taxes high or low compared to other countries?" is to look at taxes as a share of the economy. Here's how the U.S. stacks up to other OECD countries in a graph from the Tax Policy Center. (We're at the bottom of the stack, 25 percent below the average.)

For the next few years, there's no particular reason to expect there will be another major tax increase, but after 2020 the government's health care bill will start to make our spending levels look, for lack of a better term, European. There are any number of ways to stop the trend, from the extreme -- turning Medicare into a voucher-support program -- to the incremental -- tweaking Medicare and hoping that medical inflation slows down on its own. But either way, the U.S. won't have historically low interest rates forever, and it's probable that the third-lowest tax/GDP ratio in the developed world is a good deal for now, but not a sustainable deal for the long run.

IRS Plans Jan. 30 Tax Season Opening For 1040 Filers

WASHINGTON — Following the January tax law changes made by Congress under the American Taxpayer Relief Act (ATRA), the Internal Revenue Service announced today it plans to open the 2013 filing season and begin processing individual income tax returns on Jan. 30.
The IRS will begin accepting tax returns on that date after updating forms and completing programming and testing of its processing systems. This will reflect the bulk of the late tax law changes enacted Jan. 2. The announcement means that the vast majority of tax filers -- more than 120 million households -- should be able to start filing tax returns starting Jan 30.
The IRS estimates that remaining households will be able to start filing in late February or into March because of the need for more extensive form and processing systems changes. This group includes people claiming residential energy credits, depreciation of property or general business credits. Most of those in this group file more complex tax returns and typically file closer to the April 15 deadline or obtain an extension.
“We have worked hard to open tax season as soon as possible,” IRS Acting Commissioner Steven T. Miller said. “This date ensures we have the time we need to update and test our processing systems.”
The IRS will not process paper tax returns before the anticipated Jan. 30 opening date. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit.
“The best option for taxpayers is to file electronically,” Miller said.
The opening of the filing season follows passage by Congress of an extensive set of tax changes in ATRA on Jan. 1, 2013, with many affecting tax returns for 2012. ‬While the IRS worked to anticipate the late tax law changes as much as possible, the final law required that the IRS update forms and instructions as well as make critical processing system adjustments before it can begin accepting tax returns.
The IRS originally planned to open electronic filing this year on Jan. 22; more than 80 percent of taxpayers filed electronically last year.
Who Can File Starting Jan. 30?
The IRS anticipates that the vast majority of all taxpayers can file starting Jan. 30, regardless of whether they file electronically or on paper. The IRS will be able to accept tax returns affected by the late Alternative Minimum Tax (AMT) patch as well as the three major “extender” provisions for people claiming the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.
Who Can’t File Until Later?
There are several forms affected by the late legislation that require more extensive programming and testing of IRS systems. The IRS hopes to begin accepting tax returns including these tax forms between late February and into March; a specific date will be announced in the near future.
The key forms that require more extensive programming changes include Form 5695 (Residential Energy Credits), Form 4562 (Depreciation and Amortization) and Form 3800 (General Business Credit). A full listing of the forms that won’t be accepted until later is available on IRS.gov.
As part of this effort, the IRS will be working closely with the tax software industry and tax professional community to minimize delays and ensure as smooth a tax season as possible under the circumstances.
Updated information will be posted on IRS.gov.

Expired 2012 Federal Tax Provisions Extended by the Tax Relief Extension Act

January 3, 2013


Late on January 1, 2013, Congress passed HR 8 (Tax Relief Extension Act) which extended almost all of the Federal tax provisions that had expired at the end of 2011 and 2012.
Although the Tax Relief Extension Act contains many individual, business, and energy tax provisions that were extended or modified, the following are the ones that will have the most impact on taxpayers filing their 2012 Federal returns this coming filing season.
Alternative Minimum Tax (AMT)
The Alternative Minimum Tax (AMT) provisions were permanently extended as follows:

• The exemption amount will be indexed for inflation each year. For 2012 the exemption amounts are:
• Single/Head of Household: $58,600
• Married Filing Joint: $78,750
• Married Filing Separate: $39,375
• All personal nonrefundable credits may be used in calculating the AMT. This also means that the order these credits are taken against regular tax will remain as they currently are.

Individual and Business Provisions
The following individual and business provisions were extended and will apply to Tax Years 2012 and 2013:

• $250 Educator Expense Deduction – Form 1040, line 23
• Tuition and Fees Deduction – Form 8917 and Form 1040, line 34
• Itemized Deduction for Sales Tax – Schedule A, line 5
• Nonbusiness Energy Property Tax Credit reported on Form 5695, Part I
• 15 year straight line depreciation allowed for qualified leasehold restraint and retail improvements
• Tax-free distributions from IRAs for charitable purposes
• Contributions of capital gain real property made for conservation purposes (50% limitation applied instead of 30% limitation)

Section 179 Expense
The following Section 179 provisions were extended and will apply to tax years 2012 and 2013:

• Maximum deduction: $500,000
• Maximum cost before the limit is reduced: $2,000,000
• Qualified Real Property category which includes qualified leasehold improvements, qualified restaurant property and qualified retail improvement property which has a Section 179 expense limit of $250,000.

Adoption Credit
The portions of the Adoption credit that made it a refundable credit and increased the credit amount were not extended. Thus the adoption credit reverts back to being a nonrefundable credit with any excess being allowed to be carried forward for five years. The maximum credit for 2012 will be $12,650.
Federal Provisions That Were Not Extended
The following Federal provisions were not extended and thus are not applicable for 2012 Federal returns:

• 5 year depreciation for farming business machinery and equipment
• DC First-time homebuyers tax credit

Availability of Form 1040 Instructions and Publication 17
Due to the lateness of the passage of this tax bill and the uncertainty surrounding the above extender provisions the IRS has not yet released the Form 1040 instructions or Publication 17. Now that it has passed, the IRS should be releasing them in the near future.