Without a Fiscal Cliff Fix, Chaos Awaits
Unless you’ve spent the last two months living under a rock, you are well aware of the “fiscal cliff” that our nation is facing. And not surprisingly, politicians in Washington have yet to reach a deal. But what you may NOT have realized is exactly how significantly your tax bill may be impacted. It would be a very, very big deal, as Politico reports:
Doug Shulman, the former IRS commissioner, said the IRS and the 2012 tax filing season will be thrown into “chaos” if lawmakers do not fix the so-called alternative minimum tax by the end of the year.
“If those aren’t fixed, it’s going to be real chaos with the American people trying to interact with the IRS,” Shulman said at POLITICO Pro’s P2012 Policy and Politics Tax Luncheon. “People won’t get refunds.”
The last AMT patch actually expired Dec. 31, 2011. The tax is intended to ensure people above a certain income thresholds pay a minimum amount each year to Uncle Sam, but it was never indexed for inflation.
Without the quick fix, Shulman said more than 30 million people will see their taxes skyrocket. Some, he said, are “going to have a new bill of $5,000-$6,000.”
The IRS has already programmed its software to include a patch for the alternative minimum tax, but that’s based on an assumption that lawmakers will actually pass the patch. Without it, Shulman said, tax filing will be severely delayed for those who are subject to the tax.
“Most of those people are not going to be able to file around March,” he said, and most American usually file as early as January.
The Congressional Budget Office estimated it will cost taxpayers $103 billion in 2013 and $864 billion dollars over 10 years.
So if you’ve got an extra $5,000 or $6,000 that you’d like to give to the government, you’re in luck. The rest of us are facing the unpleasant fact that we may have to watch the drama in Washington DC unfold, and hope that politicians in both parties can find a way to work together. If you have questions or concerns about how these developments will impact your tax situation, please don’t hesitate to get in touch with us today!