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WASHINGTON — If you are a college student, teacher or resident of a state that has sales taxes but no income tax, the bipartisan tax agreement this month could mean significant benefits next year. And the IRS is adjusting its computers to take in your requests.
That means it will take a little longer for some taxpayers to file their 2010 returns, as the Internal Revenue Service reprograms computers for new college tuition breaks, teachers who buy classroom supplies with their own money, and Americans who live where there’s no state and local income tax to deduct.
The IRS said Thursday that it will be mid- to late February before it can accept returns that apply for those tax breaks. However, delays will be minimal for taxpayers who already itemize deductions, because they normally have to wait for their financial documents.
“The majority of taxpayers will be able to fill out their tax returns and file them as they normally do,” IRS Commissioner Doug Shulman said. “We will do everything we can to minimize the impact of recent tax law changes on other taxpayers. The IRS will work through the holidays and into the new year to get our systems reprogrammed and ensure taxpayers have a smooth tax season.”
The IRS will announce a specific date when it can start processing tax returns affected by the changes.
The changes in the law that will cause delays:
—The new line on Schedule A, Itemized deductions, to allow for state and local sales tax deductions. Taxpayers in states with income taxes usually chose that deduction instead. Taxpayers cannot complete Schedule A until this tax break is programmed in IRS computers.
—The new higher education tuition and fees deduction for parents and students, covering up to $4,000 paid to a post-secondary institution. Many parents and students, however, will instead use existing education credits.
—The new expense deduction for kindergarten-through-grade 12 educators who have out-of-pocket classroom expenses of up to $250.
The new tax law gives benefits ranging from tax cuts for millionaires and the middle class to longer-term help for the jobless.
Without the law, millions of Americans would have been hit with increases starting on New Year’s Day.
The package retains Bush-era tax rates for all taxpayers, including the wealthiest Americans, a provision President Barack Obama and congressional liberals opposed. It also offers 13 months of extended benefits to the unemployed and attempts to stimulate the economy with a Social Security payroll tax cut for all workers.
Meanwhile, a board that reviews IRS operations said examinations of returns increased by 8 percent this year on taxpayers with incomes above $1 million.