Having digested the changes in the tax law made by Congress's New Year's Day fiscal cliff legislation and sent the form changes to the printer, the Internal Revenue Service (IRS) says it will be ready to receive and process your tax return Jan. 30.
That shortens the tax preparation window by a month, but since most taxpayers don't get started until they receive their w-2 forms, it might not make a lot of difference to most people. Then again, early filers who want to get their hands on their refund as quickly as possible might be frustrated.
Some filers must wait longer
The announcement means the vast majority of tax filers -- more than 120 million households -- should be able to start filing tax returns starting Jan 30. But not everyone.
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, the IRS said.
Takes time to update and test systems
"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.
This is the second straight year the IRS has delayed the opening of tax season. In 2012 the agency said it made extensive changes to its systems in an effort to thwart identity theft, which it said is a growing problem.
If identity thieves get access to your Social Security number, they can file a fake return in your name, receiving a refund they aren't entitled to. Changes to the IRS systems are designed to help the agency identify fraudulent returns more easily.
Because of the threat of identity theft, it's beneficial to file early. If you file early and receive your rightful refund, an identity thief can be easily spotted if he files a fake return, using your Social Security number.
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.
If you use an off-the-shelf tax preparation software, keep in mind these changes will affect it as well. Check with your vendor as to when updates for the 2012 tax year will be available.