JEFF GOERTZEN / McClatchy-Tribune
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Filing your taxes has never been fun. But this tax-filing season is shaping up as one to dread because of extraordinarily late changes in tax laws, outdated or erroneous instructions and forms, increasing complexity, and the widening gulf between federal and state tax rules.
Among the developments that could spur you to down a few extra Advil as the April 15 filing deadline approaches:
The Internal Revenue Service won't start processing returns – and refunds – for as many as 13.5 million early filers until tomorrow. It could have been much worse. The IRS originally estimated it might delay processing returns for as many 50 million taxpayers until mid-March.
A single-digit typo in 2.4 million state tax forms could cost unwary California homeowners their biggest tax write-off: their mortgage interest deduction.
For the first time, California's registered domestic partners must file as married couples – but only on their state tax returns.
In short, taxpayers face an increasingly daunting task. Last year, the average taxpayer spent 26.4 hours – more than three full workdays – to complete the 1040, the IRS estimates.
In her annual report to Congress, National Taxpayer Advocate Nina Olson identified the 26 biggest problems facing taxpayers. Enemy No. 1: Congress itself. The Taxpayer Advocate Service is the watchdog arm of the IRS.
Lawmakers failed until late December to pass a much-anticipated one-year alternative minimum tax “patch.” That legislation saved an estimated 25 million extra taxpayers from owing Uncle Sam an average of $2,345 more.
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AFFECTED CREDITS
The IRS will not begin processing as many as 13.5 million returns until tomorrow because tax law changes in late December forced the agency to rewrite software code. The delays will affect returns claiming:
 Hope and Lifetime Learning education credits on Form 8863.
Child and dependent care expenses on Schedule 2 of Form 1040A.
The mortgage interest credit on Form 8396.
Residential energy credits on Form 5695.
SOURCE: San Jose Mercury News
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But the partisan impasse over how to pay for the lost revenue left the IRS and taxpayers in a bind. Taxpayers risk working from outdated instruction booklets and forms because the compromise came weeks after the IRS had sent them to the printer.
The IRS is still scrambling to rewrite its software code to process tax returns. It warns that it will be unable to process from 3 million to 13.5 million returns from early filers until tomorrow – potentially delaying up to $39 billion in refunds.
The irony is that patching the so-called “tax on the rich” will mostly affect taxpayers who wouldn't have owed it. The software mess affects taxpayers seeking credits that run the gamut from defraying college bills to caring for a child.
For everyone, including those affected by the five AMT-related forms, tax returns are still due April 15. Tax owed must be paid by that date, even if you file for the automatic six-month extension.
Filing electronically and having your refund electronically deposited into a bank account will get it to you weeks earlier than choosing to receive it by government check.
“We strongly encourage taxpayers to file electronically, particularly those affected by late tax law changes,” said Linda Stiff, acting IRS commissioner. “Filing electronically makes things easier by reducing errors and speeding up refunds.”
Taxpayers using home tax preparation software should check the companies' Web sites often for updates. Those grappling with paper forms can print updated forms from the IRS Web site at irs.gov/formspubs/index.html or order them from the IRS by calling (800) 829-3676.
Forms also are available at post offices, banks, public libraries and other outlets – though they might not be up to date. But then neither is the tax packet that last year's paper filers received by mail from the IRS in January, because it doesn't include those five AMT-related forms.
When the dust settles, you'll find there's little that's new this filing season, other than the usual inflation-related adjustments. Leading the list of new items are tax breaks for homeowners facing foreclosure or struggling with house payments that include mortgage insurance premiums.
But even small items can add up.
“Make sure that you've got the bases covered. Make sure you know all of the deductions you're entitled to, the credits you can claim,” said Maggie Doedtman, client advice manager for H&R Block, the tax preparation giant.
The Associated Press contributed to this report.
