How to spend your tax refund, then get it all back plus 30%. Sound crazy? Watch this video…
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IRS To Delay Tax Refunds to Millions of Homeowners
Own and home and pay interest on a mortgage? All taxpayers who want to deduct their mortgage-finance charges and related real estate costs must file a lengthy itemized return, rather than the simple 1040-EZ Form that can be completed by those who take the preset standard deduction. However, the Internal Revenue Service recently announced that it won’t be able to begin processing returns for the roughly 50 million taxpayers who itemize because the agency has to print new forms and update its computers.
The agency was blindsided by both Congress and President Barack Obama: It had most of its forms and computers ready to begin processing this month, but then had to start all over again after the controversial Bush tax cuts that were slated to expire at the end of 2010 were extended by our elected officials in late December.
The required updates will take several weeks to complete, the IRS says, so it won’t be able to begin processing itemized returns until mid or late February. The delay means that you’ll likely need to wait until April, May or even June to receive your refund check.
Despite the government’s holdup, you should file your return as quickly as possible so it will land on top of Uncle Sam’s 50-million stack rather than the bottom. The sooner you file, the faster you’ll get your refund.
If you own rental homes the federal government has made your world a bit more complicated in 2011. Buried in the Small Business Lending Fund Act that passed in 2010 there was a new provision for rental home owners. Now every time you work with a contractor that charges you over $600 you will have to send them a 1099.
So you think you will ignore giving Washington more information on your business? Think again, if you are caught not sending 1099’s to your contractors you could face fines up to $250,000 for failing to get the required information.
Our advice is to get the 1099 form filled out by every vendor you work with for your rental properties. The cost of non compliance is too high, and as a group you are being targeted by the Federal bureaucracy.
And maybe you heard on the radio or TV that the government is going to repeal onerous reporting requirements for small businesses? You are right on that one, but as a rental property owner, you are not included in that group. Your new tax reporting requirement was buried in a different bill.