SAN LUIS OBISPO COUNTY, Calif- Up to 100 million taxpayers could face delays if a deal isn't reached before the so called fiscal cliff. Not only will Americans not be able to file taxes early, but millions could be hit with a tax, meant for the wealthy.
The alternative minimum tax was originally designed to ensure that high income taxpayers pay a minimum tax, but now millions of people who aren't considered high income could have to pay it. The alternative minimum tax or AMT is typically adjusted each year by lawmakers to prevent it from hitting lower income earners.
"It's filtered down to where it hasn't kept pace with inflation on the exemptions to where now its getting people we don't consider to be high income," said Jayme Phillips, a CPA with Longcrier & Associates.
So who can be hit? According to the internal revenue service over 33 million people. "People who don't itemize, who are not high income are going to fall into it, then all the sudden for no other reason than the tax law change are going to pay a couple thousand dollars more a year in taxes," said Phillips.
If a person owes on their taxes they will owe more, and if they are getting a refund it will be less. There is another problem, those who want to file their taxes early may not be able to because the IRS needs congress to authorize updates to tax filing software and forms. Those who are looking for a refund early in the year may not get it. "Some people really rely on that, they depend on their tax refund, they've got plans for it already, they know they are going to get it," said Phillips.
