You have your W-2, your tax deductions are all identified and you are hoping that a big refund is in your future. You rush to your tax preparer or your computer. Not so fast! Depending on your situation, filing your return early this year might cost you money. Why? Late year tax law changes.
Congress was so late in enacting some new tax laws that the IRS and state governments are working hard to catch up. The Jobs Act of 2010 (signed into law 9/27/10) and the Tax Relief Act of 2010 (signed into law 12/17/10) have several changes effective for 2010 that could affect millions of taxpayers. This caused delays in the IRS finalizing their forms and caused software companies to make last minute changes to their software.
The good news is that most software companies have completed their program changes. Check your software to make sure it is up to date before filing your return. According to their website, the IRS will be able to start processing the returns affected by the new law on February 14.
The bad news is that the NC General Assembly, as of press time, had not accepted the Jobs Act of 2010 or the Tax Relief Act of 2010. Since North Carolina returns start with your Federal income, you may get the benefit of the new laws on your federal return, but not on your state return.
There is hope! As of February 7, the General Assembly was still in session. They may still vote to accept these new federal tax laws for North Carolina tax purpose. It may be worth waiting to file your return to find out. But don’t wait too late! You need to file your return, or file an extension, by April 18, 2011.
Everyone's situation is different. Get help from a CPA when you have questions.
--- Donna Boyette, CPA, Senior Accountant