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Tax filing season has begun; expect delays with state refunds

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Tax-filing season officially begins Monday in North Carolina, with state Department of Revenue officials warning that some refunds may take longer than normal this time around.

But not for the reasons you might suspect — the recent partial federal government shutdown.

Because of the Department of Revenue’s enhanced identity theft protection measures, it said some state refunds may take longer than normal, which is typically eight weeks for electronically filed returns and 12 weeks for paper returns. Filing returns early also reduces the risk of tax refund fraud, officials said.

Both state Revenue and the Internal Revenue Service start processing tax returns today. Taxpayers who filed before today will receive acknowledgements for electronically filed returns. Tax returns are due this year by April 15.

“We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown,” IRS Commissioner Chuck Rettig said in a statement.

Local accountants said it may be advisable to avoid submitting a paper tax return for 2018 returns because of the IRS workforce shortage.

USA Today reported that nearly 90 percent of federal tax returns were filed electronically for the 2017 tax season, according to IRS statistics. About 80 percent of refunds were distributed to taxpayers by direct deposit.

“We’re taking it at face value that filing season will go as scheduled,” said Brad Gray, managing partner with Gray, Callison & Co. PA.

Gray projected that “a lot more clients will take the increased standard deduction” unless they have extensive medical expenses and charitable giving to itemize.

The standard deduction for the 2018 tax season was raised to $12,000 for single filers, $18,000 for heads of household and $24,000 for married couples filing joint returns.

According to The Motley Fool contributor Matthew Frankel, just 5 percent of taxpayers are expected to itemize deductions starting in the 2018 tax season. In recent years, about 30 percent of all tax returns contained itemized deductions.

Gray said federal tax reform may lower the amount that charities receive “since some taxpayers are less inclined to give if they don’t get the deduction.”

Gray said clients who are required to take a partial withdrawal from their IRA after age 70.5 are sending the funds directly to a charitable organization in order to meet the minimum donation amount.

A qualified charitable donation does not have to be itemized on a tax return and is “a way to preserve an income-tax-reducing charitable deduction under the new tax law,” according to InvestmentNews.com.

Another factor in discouraging itemizing is 2018 federal tax reform capping the amount of state and local taxes — including property taxes — that can be deducted to $10,000 per household.

“The bottom line is that yes, property taxes are still deductible in 2018 and beyond,” Frankel said.

“However, the Tax Cuts and Jobs Act has severely limited the deduction, especially for taxpayers in states where they’re likely to need the deduction most.”

Richard Craver is a reporter for the Winston-Salem Journal.



Source: on 2019-01-28 00:03:45

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