Who is affected by delays related to late passage of the Alternative Minimum Tax in December?

More than 13 million taxpayers with tax returns affected by late enactment of the Alternative Minimum Tax "patch" in December will face delays with filing and refunds. The only people affected are those using any of five specific forms related to AMT calculations:

•       Form 8863, Education Credits

•       Form 5695, Residential Energy Credits

•       Schedule 2 (Form 1040A), Child and Dependent Care Expenses for Form 1040A Filers

•       Form 8396, Mortgage Interest Credit

•       Form 8859, District of Columbia First-Time Homebuyer Credit

The effect of the delay may be lessened by the fact that under previous filing patterns only between 3 million to 4 million taxpayers file returns with the five affected forms during these early weeks in the filing season.

What about taxpayers who don?t use those five forms?

There will be no delays for 125 million other taxpayers. The upcoming tax filing season will start on time in January, and tax returns and refunds will be processed on time for everyone else.

When will IRS start processing the five forms related to AMT delays?

The IRS has targeted Feb. 11 as a potential starting date for receiving and processing only the five AMT-related returns affected by the late 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. It will take approximately seven weeks after the AMT patch was approved to update IRS processing systems.

All other tax returns will be processed as normal starting in January.

How do you know if you?re affected by AMT-related delays?

Paper: For people using paper returns, you know you are affected if you are using one of the five forms.

Electronic filers: For people filing electronically, many software programs offer the option of seeing a paper version of your tax return; you can check this to see if your return includes any of the five forms affected by the late legislation. Anyone affected by the delays who files electronically too early will get a response message asking them to resubmit their tax return when IRS systems are ready, currently estimated at Feb. 11.

Paper filers using software: When you print your return, see if it includes information on the five affected forms. If it does, you shouldn?t mail your return until early February. Another option: consider filing electronically rather than mailing paper forms. With direct deposit, you?ll get your refund in as little as 10 days ? less than half the time you?d get by filing paper.

What is the best way to file AMT-related returns?

Filing electronically is the best option for everyone, including people impacted by the AMT changes. Filing electronically will get people their refunds faster, and e-file greatly reduces the chances for making an error on the AMT and other tax issues. E-file with direct deposit gets refunds in as little as 10 days. Refunds from paper returns typically take four to six weeks.

Will my tax software reflect the late AMT changes?

Yes. Taxpayers filing electronically should make sure to update their tax software in order to get the latest AMT updates.

Where do I get paper copies of the five new forms?

Taxpayers may download the forms from the IRSgov web site, visit a local forms outlet (many post offices, banks, copy centers, etc. stock tax forms), or call the IRS at 1-800-829-3676 and request that the forms be mailed to them as soon as they are available. The quickest way to get a paper form is to download it from IRS.gov.

Is it true there is another option for 1040A filers claiming child and dependent care expenses?

Taxpayers who would otherwise claim child and dependent care expenses on Form 1040A Schedule 2 can instead claim this credit by filing Form 1040 and Form 2441, Child and Dependent Care Credit. The IRS is able to process the Form 2441 even though Form 1040A Schedule 2 processing is delayed.

What should I do if I?m one of the people affected by the processing delay?

Go ahead and start working on your tax return. While there is a processing delay for some tax returns, you can still start and complete work on your return. But people using the five affected forms won?t be able to file for a few weeks until IRS processing systems are reprogrammed for the late tax law change. Remember, it?s always a good idea to start working on your tax return sooner, rather than later.

Can I just file my return now without the affected forms and file an amended return later?

The IRS strongly encourages taxpayers to wait and file a complete tax return using e-file beginning Feb. 11. If taxpayers have one of the five affected forms, using e-file with direct deposit is the fastest way to get the entire tax refund. E-file with direct deposit gets refunds in as little as 10 days.  Filing an early tax return without one of the five affected forms presents several potential problems for taxpayers:

• Slower receipt of a complete tax refund. E-file with Direct Deposit can produce a refund in as few as 10 days. Amended returns must be filed on paper and take longer (a minimum of 30-45 days) to process than original returns.  
  

• Additional taxpayer burden. Taxpayers will face additional paperwork if they decide to file without the five forms and then go back and file an amended return.  
  

• Increased taxpayer costs. Filing an amended return may increase the return preparation costs for taxpayers who use a paid tax professional (since there would be two, not one, returns prepared).   
  

• Increased chance of error. Paper returns have more errors than e-filed returns. Since amended returns can only be filed on paper, there is a greater chance of taxpayer error.  
  

• Forgetting to file an amended return. The IRS is concerned some taxpayers could forget to file an amended return, which would cost them a tax credit to which they are entitled. Filing electronically beginning Feb. 11 avoids this problem, and it gets the total refund out much faster than using an amended return. 
  

So I?m one of those who can?t file my return until Feb. 11. Do I get more time to file?

The tax deadline set by law remains April 15. However, anyone who needs more time to file can get an automatic six-month extension by filing Form 4868. If you owe additional tax, keep in mind that extra time to file does not mean extra time to pay.

When will the IRS know for sure when it will start processing the five forms affected by the AMT legislation?

The IRS has set Feb. 11 as a target date to start processing. During January, it will continue reprogramming and testing its systems to determine if there is any change to the estimated date.

Why can?t the five forms be processed until February?

These five forms require system reprogramming in order to reflect the late AMT patch enacted by Congress. The IRS will work hard to reprogram and test its processing systems so that all IRS systems are up to date and reflect current AMT law.

Earlier, I heard there were 12 AMT-related forms that would be affected by the processing delay. What happened?

Following a review of processing systems and system requirements during the final weeks of 2007, the IRS determined it could handle seven of the 12 new AMT-related forms because they did not require substantial format changes to the underlying systems.

However, the remaining five forms require more significant programming changes to accurately reflect the tax law changes. This means any of these forms can?t be filed until at least Feb. 11:

•       Form 8863, Education Credits
•       Form 5695, Residential Energy Credits
•       Schedule 2 (Form 1040A), Child and Dependent Care Expenses for Form 1040A Filers
•       Form 8396, Mortgage Interest Credit
•       Form 8859, District of Columbia First-Time Homebuyer Credit

All other forms do not face any filing delays. This includes Form 6251, Alternative Minimum Tax ? Individuals.

When does the IRS filing season begin?

There are several key dates. Taxpayers begin receiving tax packages in the mail in the first week of January, and this is traditionally regarded as the start of the tax filing. Other important dates include Jan. 11, the first day e-filed returns are accepted, and Jan. 14, the first day when the IRS begins full operation for tax return processing, and Feb. 11, the target date for the IRS beginning processing of the five forms affected by the AMT delay.

IRS Tax Articles and Information