By Kimberly Hopson
L’Observateur

LAPLACE – Taxpayers can expect to see some big changes when filing their 2012 tax returns. The IRS has announced that it will begin processing federal income tax returns on Jan. 30, eight days later than originally planned. Also, victims of Hurricane Isaac and/or Sandy may be eligible to claim casualty losses this year and several tax breaks on the verge of expiration have received two-year extensions through 2013.
The IRS blames the 11th-hour passage of tax legislation for the late 2012 filing date, but that doesn’t mean taxpayers have to wait until the last minute. They can begin the filing process now.
“They are suggesting that you go ahead and file your return as you usually do, with whatever tax professional you use or yourself,” said Olive Druin, senior tax advisor at H&R Block. “The returns will be sent into a holding pattern, and as soon as the IRS starts accepting them on Jan. 30, your return will be accepted.”
Druin said 2012 refunds will also come a little later than normal and some of the more extensive tax returns will take longer for the IRS to publish. Taxpayers should expect to wait at least 21 days before they receive a refund. Druin recommends taxpayers file electronically to receive their refund as soon as possible. She also says that most forms should be available by Jan. 30 “for the average person.”
“That’s one of the biggest changes because usually people get their refund fairly early — that’s not going to happen this year,” said Druin. “The IRS has said that even if you mail your return, it still won’t be processed until Jan. 30. And a mail-in return takes longer to process, so it will take longer to get your refund.”
Anyone who experienced loss during Hurricane Isaac or Sandy may be able to claim a casualty loss for damages suffered that were not covered by insurance. According to the IRS, this could mean significant tax savings for millions of taxpayers. Druin said she is waiting to see if any additional hurricane tax breaks will be enacted.
“With Isaac, it has, from what we understand, been associated with Hurricane Sandy,” said Druin. “The way it was explained to us is that any tax breaks that they give for Sandy will be available for Isaac. You can file your casualty loss for 2012 or amend your 2011, whichever benefits you more.”
Tuition and fees deductions, educators’ expense deductions and state and local sales tax deductions were among the tax breaks that were extended this year. The tuition credit was extended through 2017 and will allow taxpayers to claim up to $2,500 for each of the first four years of college for each student. Also included in the extensions are tax deductions for qualified charitable distributions from IRAs, mortgage insurance premiums, income exclusion of qualified mortgage debt relief and a $500 nonbusiness energy property credit. The energy property credit will allow taxpayers to claim energy efficient credits for up to 10 percent of the cost of eligible home improvements up to $500.
Two other changes will not directly affect the 2012 tax return, but taxpayers should be aware of how they can affect future tax returns.
Open enrollment for government-sponsored health insurance begins in October this year.
To apply, individuals must go through an income verification process to determine if they are eligible. The 2012 tax return will be the most convenient way to prove income
“The easiest way to prove your income is to file your 2012 tax return, which they will refer to as proof,” said Druin. “It won’t be the only way, but it will be the easiest way.”
The other big change is the death of the payroll tax holiday. The payroll tax holiday took only 4.2 percent of workers’ wages for social security contribution.
Because it expired at the end of 2012, it will now return to 6.2 percent, which is what it was in 2010. According to H&R Block, this would mean a $1,000 decrease in take-home pay over the course of the year for someone with an average income of $50,000.
Look for more extensive information about the reform as it becomes available later in the tax season. For questions about tax break extensions, casualty losses and filing dates, please see a local tax professional or visit the IRS website at www.irs.gov.