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Tax season starts on time ... but not for everyone.
The anticipated year-end tax bill with retroactive provisions to patch the AMT passed
both houses on December 19, which left little time for the IRS to change its advance drafts
of affected forms, which were predicated on the bill NOT passing.
The IRS admirably released the affected forms (Form 6251 and ten personal credit forms)
during the week following the passage. Furthermore, contrary to earlier statements by
IRS officials, the tax season started in mid-January as usual, and most returns will
be processed under the normal time schedule.
However, the IRS was not able to reprogram
and test their computers for all released forms, so returns with certain forms will not
be processed on time:
- Any return that contains Form 5695
(Residential Energy Credits), Form 8396 (Mortgage Interest Credit),
Form 8859 (D.C. First-time Homebuyer Credit),
or Form 8863 (Hope and Lifetime Learning Credits) were not processed by the IRS until February 11.
- Any return that contains an entry on line 17 of Form 4136 will not be processed by the IRS until March 3, 2008.
- Any returns with a tax from Form 8889 line 22 (formerly reported on Form 1040 line 44c),
a tax added to line 44 for recapture of a charitable contribution, or
an exclusion claim for foreign housing or foreign earned income (Form 2555 line 45)
will not be processed by the IRS until March 3. The associated changes are detailed in
IRS Pub. 4655 (Supplemental Instructions
for 2007 Form 1040 and Form 1040NR), which was released late in January.
In spite of the significance of the changes, the IRS has stated that they will not correct
Form 1040 nor its instructions, so the tax preparer must be aware of Pub. 4655 in order to know the changes!
(These changes were a result of the little-publicized Tax Technical Corrections Act of 2007,
rather than the AMT patch.)
In the case of an e-filed return, the return will be rejected until the specified date; in the case
of a paper return, the return will be held by the IRS until that date. That means, of course,
that any refunds associated with those returns will be delayed accordingly. On the other hand,
returns with Form 6251 and the other personal credit forms, including Forms 2441 (Child and
Dependent Care Expenses) and 8880 (Qualified Retirement Savings Contribution Credit),
are being processed on time, even though they were affected by the AMT patch and were not released
until the end of December.
No delays at HowardSoft. In spite of the late release of several important forms and
lingering delays by the IRS, we were ready with all forms affected by the year-end tax bill.
The only forms omitted from the pre-release were those that had not yet
been released by the IRS by the end of the year. All other forms were complete and included,
even though the IRS will not be ready to process some of them until mid-February.
Other forms have been added to the software through on-line updates shortly after the IRS
releases of those forms.
Many changes, but most forms released. In addition to the changes implied by the two year-end tax bills
(the AMT patch and the little-publicized technical corrections act),
there are
many significant changes to the forms as a result of prior legislation, including
one other major tax bill enacted this year
(as described in the next box).
In fact, the IRS long ago
released advance drafts of nearly every IRS form that we support and issued final releases of many of them.
It's just unfortunate that their timely performance has been overshadowed by the untimely performance of Congress!
For details on the changes and the IRS's progress in releasing forms,
see our
Progress Report: IRS Forms for Tax Year 2007.
We update this report on-line as we receive new information from the IRS to keep you
abreast of the changes. (Last updated February 27, 2008.)
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HowardNews: Changes galore ... and a year-end tax bill!
Even though there was only one major tax bill this year, the Small Business and Work Opportunity Act of 2007
(which we reviewed in our Sping issue of HowardNews), the released forms reveal many changes because of the
phase-in of new laws over a number of years from prior tax bills dating back to 2001. In our latest issue of
HowardNews, we detail the changes we've
already seen and our predictions about the AMT patch (which eventually came true).
Latest issue of HowardNews now on-line. For our take on the changes that were evident when we released
the newsletter (in early November), see our
Fall 2007 Issue of HowardNews. You'll see what specific changes the IRS had made and what further changes we expected,
plus information on new forms we're adding to Tax Preparer and new IRS procedures for e-file.
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Tax Forms and More
We offer three levels for each Tax Preparer software package:
Click a level above for a list of features and forms built-in and
fully-automated for that level. And to make sure you're not left behind
at the beginning of the tax season,
click here to ORDER ON-LINE.
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Get Ready for
e-file is included with Standard and Premium Level CD-ROMs,
but you must:
Except for unusual limitations imposed
by the IRS, you can now e-file most returns ... even when the data does not fit on the IRS paper forms!
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