2010 filing season gets underway; IRS expects many early filers

The IRS opened the 2010 federal income tax filing season on January 15 when it announced it would start accepting electronically filed 2009 individual income tax returns. The IRS anticipates that more than 60 percent of individual taxpayers will file their 2009 returns electronically and it is preparing for a large number of individuals to file early. Triggering early filing is the expected interest in refunds because of the economic slowdown.

E-file

Electronic filing has exploded since the IRS first accepted e-filed returns. More than 95 million returns were filed electronically with the IRS in 2009 compared to just 4.2 million in 1990.

Paper returns take four to six weeks for the IRS to process before refunds are issued. According to the IRS, taxpayers who e-file their returns and use direct deposit should receive their refunds in as few as 10 days. However, more complex returns generally take longer for the IRS to process and issue a refund if one is due.

Some taxpayers may not be able to e-file their 2009 returns. The IRS cannot electronically process 2009 returns that include Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. Taxpayers claiming the first-time homebuyer credit on a 2009 return must file a paper return. Taxpayers submitting Form 5405 must attach documentation substantiating their homebuyer credit. The IRS can only process these documents manually.

Refunds

Thanks to recent legislation, taxpayers have one more option to save their refunds. You can use all or part of your refund to purchase up to $5,000 in U.S. Series I Savings Bonds. The total amount of your purchase must be a multiple of $50. The bonds will be issued in the taxpayer's name or, if married filing jointly, the bonds will be issued in the names of both spouses. Bonds will be delivered to taxpayers by mail.

You may also be able to split your refunds among different accounts if you choose direct deposit. The IRS allows taxpayers to select up to three different accounts. This is a great option to deposit part of your refund into a retirement savings account.

Preparers

Your federal income tax return is one of the most important and sensitive documents you sign. Trust its preparation to a professional.

Our office adheres to a high professional standard and code of ethics. Unfortunately, not all preparers do and some taxpayers have been harmed by the actions of unscrupulous preparers. The consequences can be severe. Although the preparer signs the return, you are responsible for the accuracy of every item on your return.

Avoid preparers who claim they can obtain larger refunds than other preparers. If a preparer asks you to sign a blank return that should also raise a red flag.

The filing season can be stressful. It doesn't have to be. Our office is ready to help you. Please contact us today if you have any questions.

If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.