Alternative Minimum Tax Fix
Filed Under IRS News, Tax Refunds, Uncategorized
First, the good news. A last minute deal in Congress has seen the alternative minimum tax adjusted for inflation, meaning about 23 million households will avoid a tax increase of about $2000.
However, the not quite so good news is that the IRS says it will take about seven weeks to reprogram and test its systems to accommodate the change to the tax rules affecting the alternative minimum tax (AMT). That applies to electronic and paper returns, and it means that even if you file your return early, you won’t be getting any refund due to you until at least February. In the words of U.S. Treasury Secretary Henry Paulson, “It is likely there will be some delays, including the delays of some refunds.”
The AMT was introduced in 1969, with the intention of preventing a small number of wealthy households claiming excessive deductions. But it wasn’t linked to inflation, so as the years have gone by, the number of households affected has increased. There’s no denying that the fix needed to be made and that the outcome will be a positive one for many taxpayers. But the timing will be causing more than a few headaches - for those rushing to implement the changes, for the Congressmen associated with a delayed tax refund in an election year and for those taxpayers who like to file early and get their refund at the end of January.
Well don’t count on it this year.
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