Some people feared that because the fiscal cliff debacle resulted in many year-end changes to the tax laws, the IRS would have to delay the start of the tax filing season this year in order to update its tax forms and processing systems. There is good news and bad news on this front.
First, the good news is that the IRS has acted quickly and has completed the updating of most of its most popular forms. This means that the vast majority of tax filers — more than 120 million households — should be able to start filing tax returns starting Jan. 30.
You can file on Jan. 30 whether you file electronically (which the IRS prefers), or on paper. There is no advantage to filing any earlier than this — it won’t speed up your refund.
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.
However, the IRS estimates that remaining households won’t be able to start filing until late February or into March because of the need for more extensive form and processing systems changes. This group includes people who need to file any of the following forms with their tax returns:
- Form 4562 (Depreciation and Amortization)
- Form 8582 (Passive Activity Loss Limitations)
- Form 5695 (Residential Energy Credits)
- Form 3800 (General Business Credit)
- Form 8908 (Energy Efficient Home Credit)
- Form 8909 (Energy Efficient Appliance Credit)
- Form 8396 (Mortgage Interest Credit)
Most business and rental property owners must file one or more of these forms. For example:
- Form 4562 must be filed by taxpayers who own commercial or rental real estate placed in service during 2011 who want to depreciate or expense the cost. The form must also be filed to claim depreciation on vehicles or other listed property, whenever placed in service.
- Form 8582 must be filed by all rental property owners who have passive loses that may not be currently deducted — those with incomes over $100,000 who have more than $25,000 in losses.
Such taxpayers will have to wait until February or March to file their returns.
A complete list of the forms that can’t be filed until February or March is available on the IRS website.
Stephen Fishman is a tax expert, attorney and author who has published 18 books, including "Working for Yourself: Law & Taxes for Contractors, Freelancers and Consultants," "Deduct It," "Working as an Independent Contractor," and "Working with Independent Contractors." He welcomes your questions for this weekly column.