AUGUSTA - With tax packages beginning to arrive in mailboxes this week, the Internal Revenue Service is reminding taxpayers to look out for late tax law changes that could affect their return.
"The IRS will work to make this tax season as smooth as possible for taxpayers," said Linda Stiff, Acting IRS Commissioner. "We encourage taxpayers to take a minute to look into late tax law changes and common tax credits. Filing electronically makes things easier, and it reduces errors and speeds refunds."
The IRS will send 16.5 million 1040 tax packages to taxpayers this month who have filed paper tax returns in the past. The number of paper packages has dropped rapidly in recent years, falling from 34 million packages in just four years. The paper packages are becoming much less common as the popularity of electronic filing soars.
"Last year, nearly 80 million tax returns used e-file, representing about 57 percent of all returns," IRS Spokesperson Peggy Riley said. "In Maine, 300,000 taxpayers filed electronically, representing 52% of all returns filed."
This year, the paper 1040 packages may be missing some forms due to late tax law changes involving the Alternative Minimum Tax (AMT). New copies of these forms are available on the IRS.gov web site. Taxpayers who e-file will need to update their tax software to get the new forms before filing their return.
The AMT changes also mean that as many as 13.5 million taxpayers using five forms related to the Alternative Minimum Tax (AMT) legislation will have to wait to file tax returns until the IRS completes the reprogramming of its systems for the new law. The IRS has targeted February 11, 2008, as the potential starting date for taxpayers to begin submitting the five AMT-related returns affected by the legislation.
The February date allows the IRS enough time to update and test its systems to accommodate the AMT changes without major disruptions to other operations related to the tax season. Although as many as 13.5 million taxpayers will not be able to file their returns until Feb. 11, the effect of the delay may be lessened by the fact that based on previous filing patterns only 3 to 4 million taxpayers file returns with the five affected forms during these early weeks of the filing season.
The February delay caused by the AMT patch will affect any taxpayer using any of these five forms:
- Form 8863, Education Credits.
- Form 5695, Residential Energy Credits.
- Form 1040A's Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers.
- Form 8396, Mortgage Interest Credit.
- Form 8859, District of Columbia First-Time Homebuyer Credit.
"Most individuals will not be impacted by the AMT legislation passed by Congress in December, so it is still a good idea to get an early start on your preparations," Riley said.
Electronic returns involving those five forms will not be accepted until systems are updated in February; similarly, paper filers should wait to file as well. All other e-file and paper returns will be accepted starting in January.
The IRS urges affected taxpayers to file electronically in order to reduce wait times for their refunds. E-file with direct deposit gets refunds in as little as 10 days, while paper returns take four to six weeks.
Taxpayers also should be aware of important tax credits such as the Earned Income Tax Credit (EITC), the Saver's Credit and the Child Tax Credit. Taxpayers must meet certain income limits for all three but tax credits such as these can significantly lower tax bills or increase refunds.
The IRS Web site, www.irs.gov, is the round-the-clock source of information. Taxpayers can go to 1040 Central on IRS.gov to find the latest tax news, information about tax law changes, up-to-date publications and information about valuable tax credits.
The IRS also has issued an increasing number of warnings over the last few years about e-mail scams targeting individuals, businesses, exempt organizations and other taxpayers. The scams, popularly known as "phishing" scams, use phony e-mails that falsely claim to come from the IRS. As a rule, the IRS does not send unsolicited e-mails to taxpayers. Taxpayers who receive an unsolicited e-mail communication claiming to be from the IRS can forward the message to email@example.com using instructions posted on IRS.gov.