IRS Updates

Now that the Federal government shutdown is over, the IRS is back to work, and has come out with a few things to be aware of for the upcoming filing season.

First, the IRS announced that the start of filing season will be delayed by 2 weeks due to the shutdown.  The time the service was shutdown delayed the programming and testing of its computer systems so the IRS will begin accepting individual tax returns between January 28th and February 4th.  There has been no word on any delays for corporate tax returns.

Also, there are a number of tax deductions and credits that are set to expire at the end of 2013.  These items will apply to 2013 tax returns, but will be unavailable for future returns.

  • Option to deduct sales tax instead of state income taxes paid, which mostly effects those in states with no income tax.
  • Deduction for tuition and fees of either $2,000 or $4,000.  Many taxpayers pass on this item and instead get a better deal by taking one of the credits for college tuition, which will stay in place.
  • Exclusion of cancelled mortgage debt from income.  This applies to people facing foreclosure on their primary residence.
  • The ability to deduct mortgage insurance premiums.

As 2013 draws to a close and we move through 2014, we may see some or all of these items extended by Congress.

Deadlines and Shutdowns

Extended individual tax returns are due a week from tomorrow, so if you are one of the few that we’ve not seen yet, we look forward to seeing you soon.

The effects of the Federal government shutdown are broad reaching, but as they relate to taxes the answer is a little murky.  The IRS is technically closed, so phones are not staffed, IRS offices are closed and any audits in progress are suspended until the government reopens.

That said, all filing and payment deadlines remain in effect, so all taxes need to be filed and paid as if the government was up and running.  All paper tax returns and payments made by check will be considered on time if postmarked by the due date.

The IRS will not, however, be issuing refund checks of any kind during the shutdown.

The system that sends out automated notices will also continue to run during the shutdown, so people may be put in the odd place of getting a notice but not being able to call the IRS and figure out how to resolve it.

We’ll keep track of what’s happening in Washington and bring you the tax related news as it becomes available.