Jan 2, 2011

50 million itemizers can't file taxes early

The Obama administration and congressional Democrats fought hard to block the extension of the Bush tax cuts after the November elections.

They finally realized they couldn't win and passed the Bush tax cuts but not soon enough for the IRS to reprogram its processing systems in time for early filers who itemize deductions.

The IRS said that it needs until mid-to late-February to reprogram its processing systems because Congress acted so late this year with the changes for the Bush tax cuts.

The bill, which includes deductions for state and local sales taxes, college tuition and teacher expenses, wasn't signed into law until Dec. 17.

As a result, the 50 million taxpayers who itemize their deductions will have to hold off for a bit before they file.

Of course, not everyone files early: only about 9 million of the 140 million U.S. tax filers filed in January or February of last year.

The bill ensured that the federal income tax rates would not change, and itemized deductions will continue to be allowed in full for high-income taxpayers.