Latest tax season ever looms with complications for families and the economy
PADUCAH, Ky.— Tax credits for families with children, unemployment insurance, and tuition tax credits were all extended thanks to the fiscal cliff legislation that passed in early January. That's the good news, but for tax payers, the hassle is far from over.
The fiscal cliff legislation made changes to the tax law, and that affects the type of tax forms that need to be filed. The IRS needs time to prepare and get the new forms out. That, in turn, means they won't be ready to process tax returns until January 22nd or later. Refunds will also come later than ever this year, and that is what will adversely affect low-income families and the economy.
"By and large, we would say that the vote on the fiscal cliff was largely good news. The timing of it was horrible," said CPA Dean Owen. He said low-income families who benefit from the earned income tax credit, or EITC, can generally count on getting their refunds in January. This year, they may not see that money until February or even March. "The whole political machine doesn't seem to learn that if you make tax changes list late, there is a very real, very human cost," Owen said.
Owen said about fifty percent of people who qualify for EITC returns are families with children. "Our folks that are struggling to get back into the middle class, or the people who need some help, will see really late delays in their tax season. Almost no one will get a refund in January. What that does for our economy is gonna be equally devastating," Owen said.
He also estimates that about 130 million dollars worth of spending will disappear from the economy in January with the absence of the EITC returns. That number just accounts for western Kentucky.
The implications are that 2013 could be the start of another tough year for people already in a financial pinch. "There's really very little the tax payer can do about it. They just have to wait," said Owen.
The fastest way to get your taxes filed once the forms have been prepared is electronically. The delays for paper tax returns are often longer.