The IRS announced they would not start processing tax returns until late January. For many low income families expecting up to $9000 tax refund this will cause an extreme financial hardship as they are trying to catch up from the holiday spending.
The fiscal cliff bill extends tax credits for families with children; extends unemployment insurance; extends the tuition tax credit for families; and extends other tax benefits that were scheduled to expire. Fortunately these are extended, but it may come at a cost. Tax forms from the federal government and many states may be delayed in the aftermath of the fiscal cliff legislation, according to American Tax Professional Group (ATPG).
ATPG, warned of possible delays in the filing of tax returns due to the late passage of the American Taxpayer Relief Act of 2012. Many of the changes to tax law affect the tax forms needing to be filed, and the IRS will need time to get the needed tax forms released to CPA's, EA's, tax preparation firms and software companies, as well as taxpayers.
The IRS had previously announced that it would not process tax returns until January 22, which is approximately one week later than usual. This late start, even if the IRS holds to the January 22 date despite the late-breaking tax changes, could mean delays of federal refunds anywhere from 10-21 days, when compared to prior years. In some cases, the delays for paper tax return filings may exceed those for electronically-filed returns.
Refunds are expected to be delayed until at least February for almost everyone. That is the latest ever since the advent of 'national' electronic filing. The IRS is also reporting it plans to hold up as many as 30% of EITC return for 75 days to verify eligibility.
In addition, approximately 30 states are affected because their tax forms and instructions could not be finalized until the federal issues were resolved.
The fiscal cliff bill extends tax credits for families with children; extends unemployment insurance; extends the tuition tax credit for families; and extends other tax benefits that were scheduled to expire.
While there is good news for many families in passage of the American Taxpayer Relief Act of 2012 it may come with some unforeseen cost, namely delays in the ability for early season filers, who traditionally are heavy users of Earned Income Tax Credit and other credits to help with living expenses.
According to Becky Spencer, a local Enrolled Agent , owner of Laser 1040 and member of American Tax Professionals Group, "The Earned Income Tax Credit system is the federal government's way of distributing a lot of the government aid to low income families, approximately 50% of all families with children benefit from EITC. In many ways this s like delaying Social Security or unemployment benefits for an entire month for an entire nation. IT will cause difficulty for many families. Of course this comes right on top of the increase in payroll taxes in the new tax law. There really is human cost to these kinds of delays when it comes to the added financial stress forced on a lower income family".
have questions you can call Laser 1040 at 252-0100.