Taxpayers who fall within income levels under the Alternative Minimum Tax (AMT) requirement, or “wealth tax” as it’s often referred to, may be unable to file their tax return until late March if Congress does not agree to a fiscal cliff deal by December 31. This will affect as many as 100 million taxpayers and result in significant refund delays.
Exemption levels under the AMT were defined decades ago and have never been adjusted for inflation. Instead, Congress has regularly passed an AMT “patch” to correct the oversight by raising the exemption levels. Lawmakers have failed to provide a “patch” for 2012 and with tax filing season beginning in less than two weeks, IRS Acting Director, Steven Miller, says filers can expect “lengthy delays of tax refunds and unexpectedly higher taxes for many taxpayers who will be unaware that they are newly subject to AMT liability.” He estimates that close to 30 million additional taxpayers may have to pay the AMT.
Without a fix, bills in the House and Senate indicate that AMT levels for joint filers will jump from $45,000 to $78,750 and from $33,750 to $50,600 for single filers.