The Internal Revenue Service has kicked off the 2011 Tax Season

The Internal Revenue Service has kicked off the 2011 Tax Season with several announcements that impact taxpayers. First of all, taxpayers have until Monday, April 18th, to file their 2010 tax returns and pay any due tax. This is because Emancipation Day, a holiday observed in the District of Columbia, falls on April 15th this year. By law, District of Columbia holidays impact tax deadlines in the same way Federal holidays do, giving all taxpayers three extra days to file this year.

    For most taxpayers, the tax filing season will start on schedule. However, the tax law passed by Congress and signed by President Obama in December means some taxpayers will need to wait until mid to late February to file their returns in order to give the IRS time to reprogram its computers for the changes. Those who need to wait to file include taxpayers claiming itemized deductions on Schedule A, taxpayers claiming the higher education tuition and fees deduction and taxpayers claiming the educator expense deduction. In the meantime, affected taxpayers should not submit their 2010 tax returns until the IRS announces a specific date when it can start processing returns impacted by the recent law changes. This includes both electronic filers and paper filers. The IRS will start accepting simple e-filed returns on January 14th.

    The National Taxpayer Advocate, in her Annual Report to Congress on January 5th, noted that individual taxpayers find tax preparation so overwhelming that about 60 percent now pay preparers to do it for them and another 29 percent use software packages to do their returns.

    The IRS still holds taxpayers responsible for the  accuracy of their returns, even if they use a paid preparer. Accordingly, it is very important to provide complete and accurate information to the preparer. The required information includes the name, social security number and address of the taxpayer, the spouse and any dependents included on the return. For someone using a preparer for the first time, a copy of the previous year’s return is essential, but three years of prior returns is preferred. In addition, copies of continuing schedules such as depreciation schedules, net operating loss and/or tax credit carryovers and tax basis of ownership interests in Partnerships and SubChapter “S” corporations are necessary.

    The following documentation is necessary for the preparation of the current year return:

• All year end tax documents received by the taxpayer, including W-2s(wages), 1099-INT(interest), 1099-DIV(dividends), SSA-1099(social security benefits), 1099-B(proceeds from broker and/or barter transactions, 1099-R(pension and IRA distributions), 1099-MISC(other miscellaneous income, 1099-S(Proceeds from Real Estate Transactions), Schedules K-1 from Partnerships, S corporations, estates and trusts and all other income reporting statements, including all copies provided from the payer of the income.

• Copies of Real Estate Tax Statements, Mortgage interest payments(Form 1098), Motor Vehicle license tab receipts, Acknowledgment Statements from Charities for charitable contribution deductions, Certificates of Rent Paid(for renters claiming a MN Rent Credit).

• Copy of the closing statement if you bought or sold real estate.

• Detail of estimated tax payments made during the year, if any.

• List of itemized deductions categorized on a separate sheet for medical, taxes, interest, charitable contributions and other miscellaneous deductions.

• Mileage figures for any automobile expense claimed, including total mileage, commuting mileage, medical mileage, charitable mileage and business mileage by vehicle.

• Income and deductions categorized on a separate sheet for business and rental activities.

    In addition, most preparers have a questionnaire to be completed which will indicate if other items need to be addressed in the preparation of your return.