By Beverly DeVeny, IRA Technical Expert
Follow Me on Twitter: @BevIRAEdSlott
Most of the talk of the fiscal cliff focuses on the impending tax increases and budget cuts and the impact that they will have on businesses, governments, and, ultimately, on taxpayers. One of the ways that taxpayers will be affected is caused by the impact of the fiscal cliff on IRS.
IRS has not yet released tax tables for withholding from wages paid in 2013. That is because we do not yet know what the rates are going to be in 2013. If we go over the cliff, rates will go up. If we retain the Bush tax cuts for another year, rates will remain the same. Or, we could have something in- between if that is the route Congress chooses to go. If anyone is counting, the 2013 rates should start in 18 days (today's post date is 12/14).
All the talk in Congress about the fiscal cliff seems to have pushed other legislation to the side. We still do not have an extenders bill for 2012. Without that piece of legislation, we have no alternative minimum tax (AMT) patch. What that means for IRS is that it does not know how to program its software for the 2013 tax filing season for filing 2012 tax returns. It also cannot prepare the forms necessary for filing tax returns. The result: delays in the start of the tax filing season and delayed refunds for many early filing taxpayers.
The result is worse if the AMT is not patched. It could take weeks for IRS to update its software and tax forms. It is projected that about 30 million additional taxpayers could be subject to the tax if it is not patched. Why do we have this ongoing problem, year after year? Because the tax was not indexed for inflation when it was enacted and Congress has not managed to come up with a permanent fix for this seemingly simple problem.
We deserve to know what our taxes will be, early in the year, so that we can do effective tax planning. Unfortunately, we may not have that luxury. We deserve the right to be able to file our taxes and get our refunds, if we qualify, sooner rather than later. Let's hope Congress acts in the best interests of the American sooner rather than later. It is time for compromise that helps to solve our problems and gives us some certainty.
- The fiscal cliff discussion has pushed aside important legislation like the extenders bill for 2012
- We don't have an alternative minimum tax (AMT) tax so IRS does not know how to program its software for the 2013 tax filing season
- Result? Delays in the start of the tax filing season and delayed refunds for many early filing taxpayers