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Earlier on this site, we made the following announcement, “According to an IRS bulletin, about 50 million taxpayers will face an income tax filing delay this year. If you itemize your tax deductions, then you will have to wait until mid to late February in order to file your tax return.”

Now the IRS has released another news bulletin giving us the exact date when the tax filing delay will end.

When Will The Tax Filing Delay End?

According to the announcement:

The Internal Revenue Service plans a Feb. 14 start date for processing tax returns delayed by last month’s tax law changes. The IRS reminded taxpayers affected by the delay they can begin preparing their tax returns immediately because many software providers are ready now to accept these returns.

Who is Affected By The Tax Filing Delay?

Those who need to wait to file include:

Taxpayers Claiming Itemized Deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses as well as state and local taxes. In addition, itemized deductions include the state and local general sales tax deduction that was also extended and which primarily benefits people living in areas without state and local income taxes. Because of late Congressional action to enact tax law changes, anyone who itemizes and files a Schedule A will need to wait to file until mid- to late February.

Taxpayers Claiming the Higher Education Tuition and Fees Deduction. This deduction for parents and students – covering up to $4,000 of tuition and fees paid to a post-secondary institution – is claimed on Form 8917. However, the IRS emphasized that there will be no delays for millions of parents and students who claim other education credits, including the American Opportunity Tax Credit extended last month and the Lifetime Learning Credit.

Taxpayers Claiming the Educator Expense Deduction. This deduction is for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250. The educator expense deduction is claimed on Form 1040, Line 23 and Form 1040A, Line 16.

So if you itemize your taxes using Schedule A, or claim any of the credits listed above, then you are subject to the tax filing delay.

I’m Subject To The Tax Filing Delay, What Are My Options?

If you are one of the 50 million taxpayers who have to wait until February 14 in order to file your 2010 return, you do have a few options. According to the IRS:

People using e-file for these delayed forms can get a head start because many major software providers have announced they will accept these impacted returns immediately. The software providers will hold onto the returns and then electronically submit them after the IRS systems open on Feb. 14 for the delayed forms.

Taxpayers using commercial software can check with their providers for specific instructions. Those who use a paid tax preparer should check with their preparer, who also may be holding returns until the updates are complete.

I included this information regarding TurboTax when I first wrote about the income tax filing delay, but it bears repeating:

For instance, TurboTax announced in a recent blog post, that they will allow you to file your returns beginning on January 6th:

Even if you are claiming one of these deductions, don’t wait to start your return. TurboTax products are already up-to-date with all the latest forms and schedules. You can prepare your return with TurboTax and electronically file it beginning on Jan. 6.

TurboTax will securely hold your return until the IRS begins accepting returns impacted by the processing delays. TurboTax will send you an email confirmation that your return has been e-filed and accepted by the IRS.

The bad news is that even if you are able to file early, the IRS will not begin accepting returns until all of their systems are updated!

I have used TurboTax and other Intuit products in the past, and I have no problem recommending them. Of course, if you are looking for professional tax preparation, then contact us to schedule an appointment.

Also, if you are typically a procrastinator when it comes to filing taxes, then you’ll be happy to know that the tax filing deadline has been extended this year.

Since it’s never good to do financial planning at the last minute, take a look at the IRA contribution limits, 401k contribution limits, and the income tax rates for 2011.

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The Income Tax Rates for 2011 haven’t changed much from 2010. This is because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was signed into law on December 17, 2010 (Click here if you would like to read the full bill). This Act included a last minute extension of the Bush-era tax cuts, which in turn confounded most projections regarding the federal tax rates for 2011.

If you recall, this is the reason for the income tax filing delay, but not the reason for the extension of the tax deadline.

First I will give you the income tax rates for 2011 in the form of a basic chart with the dollar range and the marginal tax rate. Then I will list the income tax rates using the form of the IRS rate table showing exactly how much you will pay in taxes.

Single: Income Tax Rates

Taxable Income is	Taxable Income is
Over	But Not Over	Tax Rate
$0	$8,500	10%
$8,500	$34,500	15%
$34,500	$83,600	25%
$83,600	$174,400	28%
$174,400	$379,150	33%
$379,150	Unlimited	35%

Below is the actual dollar amount that “single” taxpayers will owe:

If Taxable Income Is Over	But Not Over	The Tax Is:
$0	$8,500	10% of the taxable income
$8,500	$34,500	$850 plus 15% of the excess over $8,500
$34,500	$83,600	$4,750 plus 25% of the excess over $34,500
$83,600	$174,400	$17,025 plus 28% of the excess over $83,600
$174,400	$379,150	$42,449 plus 33% of the excess over $174,400
$379,150	Unlimited	$110,016.50 plus 35% of the excess over $379,150

Married Filing Jointly: Income Tax Rates

Taxable Income is	Taxable Income is
Over	But Not Over	Tax Rate
$0	$17,000	10%
$17,000	$69,000	15%
$69,000	$139,350	25%
$139,350	$212,300	28%
$212,300	$379,150	33%
$379,150	Unlimited	35%

Below is the actual dollar amount that “married filing jointly” taxpayers will owe:

If Taxable Income Is Over	But Not Over	The Tax Is:
$0	$17,000	10% of the taxable income
$17,000	$69,000	$1,700 plus 15% of the excess over $17,000
$69,000	$139,350	$9,500 plus 25% of the excess over $69,000
$139,350	$212,300	$27,087.50 plus 28% of the excess over $139,350
$212,300	$379,150	$47,513.50 plus 33% of the excess over $212,300
$379,150	Unlimited	$102,574 plus 35% of the excess over $379,150

Head of Household: Federal Tax Rates

Taxable Income is	Taxable Income is
Over	But Not Over	Tax Rate
$0	$12,150	10%
$12,150	$46,250	15%
$46,250	$119,400	25%
$119,400	$193,350	28%
$193,350	$379,150	33%
$379,150	Unlimited	35%

Below is the actual dollar amount that “head of household” taxpayers will owe:

If Taxable Income Is Over	But Not Over	The Tax Is:
$0	$17,000	10% of the taxable income
$17,000	$69,000	$1,215 plus 15% of the excess over $12,150
$69,000	$139,350	$6,330 plus 25% of the excess over $46,250
$139,350	$212,300	$24,617.50 plus 28% of the excess over $119,400
$212,300	$379,150	$45,323.50 plus 33% of the excess over $193,350
$379,150	Unlimited	$106,637.50 plus 35% of the excess over $379,150

Married Filing Separately: Federal Tax Rates

Taxable Income is	Taxable Income is
Over	But Not Over	Tax Rate
$0	$8,500	10%
$8,500	$34,500	15%
$34,500	$69,675	25%
$69,675	$106,150	28%
$106,150	$189,575	33%
$189,575	Unlimited	35%

Below is the actual dollar amount that “married filing separately” taxpayers will owe:

If Taxable Income Is Over	But Not Over	The Tax Is:
$0	$8,500	10% of the taxable income
$8,500	$34,500	$850 plus 15% of the excess over $8,500
$34,500	$83,600	$4,750 plus 25% of the excess over $34,500
$83,600	$174,400	$13,543.75 plus 28% of the excess over $69,675
$174,400	$379,150	$23,756.75 plus 33% of the excess over $106,150
$379,150	Unlimited	$51,287 plus 35% of the excess over $189,575

A Quick Note About Marginal Tax Rates:

As you can see from the tables above, a marginal tax system works very differently than a flat tax system. If the United States used federal tax rates based on a flat tax, then once you crossed over into a new tax bracket, all of your income would be taxed at that higher rate. For example, once a single taxpayer earned over $34,500 in taxable income, then they would pay 25% on all of their income.

However, due to our marginal tax system, this single taxpayer only has to pay 25% on taxable income over $34,500. You must keep this in mind when you evaluate whether a raise, bonus, or investment is as good or bad as it seems (especially when compared to a flat tax system).

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