Income Tax Refund: How the New Tax Law Might Delay Your Refund but Get You More Money

It used to be you could file your income tax forms and expect your income tax refund a few weeks later, if you did it in January, ahead of the tax filing crowd. But now a new law passed by Congress in 2010--the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 will delay the filing and refund of some tax payers.

Income tax refunds will be delayed by the Act because tax filing will be delayed for some Americans. In fact, there are three types of Americans who will not be able to file as early as January.

Educator Expense Deduction

School teachers who want to take advantage of the tax deduction approved by Congress in late 2010 will not be able to file their income taxes until the middle to latter part of February 2011.

This tax deductions allows school teachers to take a tax deduction for as much as $250 of their out-of-pocket expenses for purchases made for classroom use. But there is one caveat: they have to wait this year until the IRS can create new tax software to accommodate the deduction.

IRS is reporting it will have the software program in place to accommodate these teachers desiring to take the deduction by mid to late February.

All other teachers who don't want to take advantage of this tax deduction--or didn't have up to $250 in personal out-of-pocket expenses can go ahead and file like they normally did in preceding years.

Higher Education Tuition and Fees Deduction

If you are a college student and want to take advantage of the new $4,000 tax deduction for your tuition and other IRS approved college costs, you will have to wait to file your tax return until mid to later February, too. That goes for your parent as well, if they are the ones who claim you as a dependent and pay your college expenses.

The IRS said that Congress' Dec. 17 vote in favor of the higher education deduction came too late in the year for them to already have the software in place to allow immediate filing in 2011. This Higher Education Tuition and Fees Deduction, Form 8917, is not the same thing as the American Opportunity Tax Credit or the Lifetime Earning Credit.

College students will benefit from the increase from $2,500 to $4,000 in deduction amount, but the late December vote date required the IRS work through the holidays and on into January and part of February to complete the software to accommodate the new deduction, the IRS said.

Students and their parents who desire to take the lesser deductions or the Lifetime Earning Credit do not have to wait to file.

Schedule A Itemized Deductions

Those who normally file a Schedule A for itemized deductions--and those who live in states that do not have to pay state or local income taxes--will need to wait until the IRS has software ready for them to file their tax returns, sometime in February.

Schedule A itemized deductions include such things as mortgage interest and medical and dental expenses, as well as additional deduction items.

States that do not have a state income tax and which are impacted by this new tax law include the states of Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

Income tax filers who do not meet one of these three criteria can file their tax return as normal, with no time delay.

For more on the IRS' tax filing delay go to IRS.gov.

Reference: IRS.gov