The Tax Man Cometh, What’s in Store for this Year’s Tax Filing Season?By Lawayne Childrey | Published 28 Jan 2011 03:20pm |
Millions of taxpayers who itemize deductions will have to wait until mid February to file their federal tax returns. And as MPB's Lawayne Childrey reports there are other changes Mississippians can expect this tax year.
The reason for the income tax filing delay is because congress waited until the very last minute to make decisions regarding the tax code. That means the IRS is now scrambling to reprogram their systems with all the details of the new law.
Part of the new tax law says married couples filing jointly in Mississippi will be able to take a standard deduction of nearly $12,000. For singles and married couples filing separately its $5,700. IRA Murray with United Way of Mississippi says big changes are also in store for families wanting to take advantage of the earned income tax credit which has increased more than $2,000 since 2008.
"When you're talking about families who are working hard but don't make quite enough money to make ends meet this is a huge opportunity for them to get an influx of cash that can act like a stimulus for them and their families. And then they also turn around and spend it right away in the communities. Last year we had about 4,4 million dollars worth of tax refunds and half of that was earned income tax credit. So you can see a lot of people really utilize it."
While more Mississippians are taking advantage of the earned income tax credit others may be taking advantage of the fact that they can now contribute more to their 401k retirement and IRA accounts before having to pay tax on it. But Murray says while there are many high points to the new tax laws there are some low points as well.
"There a certain deductions that have been eliminated, there are certain deductions that aren't as large as they use to be and then there were some stimulus credits out there that aren't around this year. So in some cases you may actually even either owe more or get less back on your return than you normally would. And then this is also the first year that people who claimed the first time home buyer credit a couple years ago are gonna have to pay back and that's a $500 difference in their tax return right there."
As Mississippian's continue to fight their way out of a long and deep recession, IRS representative Nannette Battle suggest Mississippian's take at least part of their tax return and reinvest into a special savings plan.
"They have the opportunity to do what we call a split refund where they can send some money to a savings account, checking account and also by US savings bond. And so that is the way for our families to get that big boost that we're talking about and get that big boost for a rainy day."
If you are one of the thousands of Mississippi taxpayers who wait until the last minute to file your taxes the IRS says the due date has been extended to April 18th because the 15th falls on a Washington holiday. Lawayne Childrey MPB News.
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