You may have already heard that Congress took its sweet time making sure that you, Joe and Josie Taxpayer, can claim certain popular deductions this spring. They include breaks for state and local sales taxes, college tuition, and classroom materials that teachers purchase with their own dime.
If you're one of the nearly 1 million people who claim any of those three tax goodies, there are a couple of things you should know. The IRS will not start processing your tax return until Feb. 3, a little later than usual. For most people, that won't be much of a problem. If you're an early-bird tax filer, you may have to wait a bit for your refund (or for your check to be cashed).
Since the changes happened late in December last year, that means filling out your tax forms will get a little more complicated this year. If you file electronically, you can pretty much ignore all this nonsense. Your tax software will have the information already installed, or it will be available in the software updates.
By the way, if you're interested in filing electronically, but you don't want to pay for the tax preparation software, check out the IRS Free File program. It's available to pretty much anyone who earned less than $52,000 last year.
If you're the old-fashioned type who likes trying to decipher the flowcharts in the paper instruction manuals and filling in those teeny-tiny lines on the form, you're in for some real fun. All that paperwork had to go to print before Congress got around to extending those three deductions, so the tax breaks are missing from the forms and instructions. If you want to claim any of them, here's what you'll have to do.
State and local sales tax deduction
Claim the deduction on Form 1040, Schedule A, line 5. That's the line where you would ordinarily claim a deduction for state and local income taxes. Write "ST" on the dotted line to the left to indicate you're claiming the sales tax deduction, not the income tax deduction. (You only get to pick one, unfortunately.)
College tuition and fees deduction
Claim this deduction on Form 1040, line 35, where you would otherwise enter your "domestic production activities deduction." Enter a "T" to the left of the line if you're claiming the tuition and fees deduction. Enter a "B" if you're claiming both items on the same line, and attach a breakdown of each deduction. I can almost promise you that you don't have a domestic production activities deduction. No, laundry and dishes don't count.
Teachers expense deduction
You'll note this one on Form 1040, line 23, where you'd otherwise put your "Archer MSA Deduction." Write an "E" (for educator) on the line to note that it's a deduction for any classroom materials you purchased at your own expense. Write "B" and attach a breakdown of the deductions if you're claiming both. If you're a teacher, odds are low that you'll have an Archer Medical Savings Account.
I swear I'm not making this up. It's almost enough to break your pencils in half and put the Form 1040 straight into the paper shredder. You can quickly see why companies like Intuit
These complications may help their business considerably this year. With instructions like these, it's no wonder many sane taxpayers opt to hire someone to do the job, or buy a software package, with their simpler instructions, to prepare their returns.
Don't blame the IRS alone. Congress waited until the very last second to make sure these routine deductions stayed on the books. The fine folks who run the nation's tax-collection business just had to do the best they could to cope with the change. Now it's your turn.
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