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Subscribe to RSSWith some investments already feeling the pain of the looming cliff, millions of Americans are at risk of being affected. The first to consider is the expiration of the Bush-era tax cuts, according to CNBC's Jackie Deangelis.
If you’re the type of person who likes to file your income tax return as soon as possible, then you’ve got another reason to be frustrated by the fiscal cliff stalemate in Washington, D.C.
Most of the tax changes being discussed as part of the fiscal cliff negotiations would go into effect in 2013, meaning that taxpayers would first have to account for them when they went to file those tax returns in early 2014.
But a handful of the provisions under discussion could affect Americans’ 2012 taxes. The down-to-the-wire negotiations in the nation's capital could leave the IRS scrambling to adopt the changes in its systems, delaying the agency’s ability to accept some people’s returns.
“Congress oftentimes waits until the last minute to pass legislation, and then that in a turn affects the IRS,” said Bob Meighan, vice president with tax software provider TurboTax.
That's definitely been the case this time around. Just a few days before the end of the year, Congress has not been able to come to an agreement over a series of tax increases that are scheduled to go into effect Jan. 1. President Barack Obama said Friday that he was "modestly optimistic" a deal could still be reached to avert going over the so-called fiscal cliff.
Acting IRS Commissioner Steven T. Miller has already warned that there could be serious filing delays if Congress doesn’t provide a patch for the Alternative Minimum Tax. An IRS spokesman said Friday that the agency did not have any further information beyond the warnings Miller gave to lawmakers in a letter earlier this month.
The AMT is a provision in the tax code that was designed to ensure that wealthy taxpayers have to pay at least a minimum amount of taxes. It was never indexed for inflation, however, so Congress has had to provide temporary fixes over the years to ensure that lower-income taxpayers aren’t affected.
That hasn’t happened yet this year because of the fiscal cliff stalemate. In the letter to House Ways and Means Committee Chairman Dave Camp earlier this month, Miller, the acting IRS commissioner, warned that if Congress doesn’t provide a patch this year, then the IRS would have to make significant programming changes to account for that.
“In that event, given the magnitude and complexity of the changes needed, I want to reiterate that most taxpayers may not be able to file their 2012 tax returns until late in March of 2013, or even later,” Miller wrote in the Dec. 19 letter.
Miller also warned that as many as 30 million additional taxpayers could be subject to the AMT if a patch isn’t put in place.
For now, Miller said the IRS is acting as if Congress will provide an AMT patch.
Meighan, of TurboTax, said his company also has prepared its software as if a patch will be in place. But he said the company also is ready to switch gears quickly if it must.
Meighan said a few other provisions under discussion as part of the fiscal cliff negotiation could affect a minority of taxpayers in 2012. Those include a deduction teachers get for school supplies they purchase for their classrooms and a tuition and fees deduction that applies to some students.
"It's really gotten to a point now where you have the ideological divisions in the country overlapped now with the partisan divisions," said CNBC's Chief Washington Correspondent John Harwood.
The IRS has had to ask people to delay filing their returns before. In 2010, Congress passed last-minute tax law changes on Dec. 17. As a result, the IRS said it wouldn’t be able to accept returns with itemized deductions until February of 2011 because it needed time to adjust its systems.
If people are forced to wait to file their tax returns, that would also mean a delay in getting tax refunds. Roberton Williams, a senior fellow with the Tax Policy Center, said that in turn could have some effect on the economy because many people count on that money to pay off debt or buy big-ticket items.
If the AMT isn’t patched at all, he noted, that would be an even bigger economic hit because some taxpayers wouldn’t get their expected refund at all.
“That will have a major effect on the economy,” Williams said. “It will be pulling a lot of money out of the economy that people are expecting.”
Despite the Congressional deadlock, experts say they are still assuming a deal will be made to put the patch in place.
“For most people, come 2013 they’ll be able to file their taxes, they’ll get their refund and life goes on,” Meighan said.
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I have my payroll deductions scheduled so that at the end of the year I always get a refund from the government. Sometimes it's $1.0 - 1.5K each year. This way I never have to worry about owing them or the 15 April deadline. Ideally, getting that refund lower is good too, but since there are variables each year it's better than owing the government money.
Think about it...
Maybe going over the "Cliff" would be good in the long run. We can't go on and on with ever growing national debt. I wonder if at some point in the future, China will want to call in their markers? When their military becomes superior to ours, we may end up having to give them Alaska. Rome is burning. Get a head start and have your grandkids start learning Chinese.
All those people who file early to get their fat EITC bonus check are not going to be happy about the delay.
If Obama was really interested in a balanced budget, why hasn't he submitted a budget any of the years he was in office? Is anyone really so stupid that they believe this guy wants a budget?!?
Congress makes the budget first off. And while the president can outline a budget proposal, can you think of one that republicans would accept besides eliminating all taxes for the top 2%, and raising them 10 fold on the bottom 50%? Complain all you want, but base it with at least one foot in reality.
Then at least it would be fair.
And even if they allow the tax cuts to expire for the top two percent, that won't balance the budget.
Dear RocketLady. Try reading the U.S. Constitution. It reads: "All bills considering taxes and spending shall originate in the House of Representatives." Here's some advise: "It's better to be thought a fool than open your mouth and prove it." You don't know what you're talking about.
john ---- if that is true, then why is the senate currently working on a budget bill ???
John Colorado, Please read the link below and in the future, if you cannot add an intelligent comment, take your own advice and remain silent.
I guess we aren't allowed to post links to other sites.
Fix the IRS , there is something wrong with the system when people get back more than they paid in and those who pay no taxes !!!!!! All elected officials IRS forms should be made public records every year.
Do you want to know who is really responsible for this jug-screw . . . just go look in the mirror.
If any additional money is charged I think that Harry Reid and the Democratic Party should pay since they have held up all bills in the senate unless Harry Reid liked them enough to bring them to the floor for discussion and a vote.
Dear Compromise Now. That is absolutely false. If you're going to be biased, at least be try not to be an ignorant ass while doing it.
We really need better people in the Senate and the Congress.
John Boehner has to go.......... he's a party hack......no spine ....nothing new....same old crap.
All of them need replaced.
Then.......maybe............things will get done.
I'm a middle school teacher. When the kids have a conflict or a dispute, I put them in a room and tell them to work it out or the adults, teachers, parents, and administrators will work it out for them. Not once in the decades I've been teaching have the kids not been able to work their problems out. How sad that are Congress can't even function at the level of our middle school kids. Maybe all elected officials should have to spend a semester in school to show them how it's done. The U.S. government is shameful.
Spot on with the kids but they don't eat and breath $$/favors 24/7 via like minded sociopaths.
Seems everything for 2012 taxes should be already set and everything being discussed and voted on now should be about 2013, for anyone filling a simple tax form there should be no delay.
HaHaHaHa
I'm very, very wealthy...
Do you think I can afford that $15,000 handbag after my taxes go up on January 1st?
Or will I have to settle for the $13,000 handbag instead? Booo
Lol...
Google "Dysfunctional" and you get members of Congress and Senate, Boehner, McConnell, and everyone else. These baboozes create one crisis after another so they will look good, failing to realize the entire world is laughing at a bunch of clueless, legends in their own mind, low budget circus clowns/Keystone Cops. Their willful incompetence has cost us a credit rating downgrade and untold billions in lost/wasted tax payer's money. They just don't get it, rose glasses on, can't see their failures. Too bad their parents didn't practice birth control. I'm all for 8-year term limits for both groups. When done you cannot work for any government agency or any capacity for the government for 10 years. Did your time, now go home, move on. Sad to see our country going downhill thanks to their willful failures. We deserve better, they can't deliver.
This so-called fiscal cliff is getting old. Why are the republican's holding up a deal? is it just to protect the uber rich? These extremists will be held accountable in 2014. All tea baggers will be gone. They're are a despicable lot of no-nothing goons.
r bell, and you liberals are nothing but a cancer to this once great country. You are under achievers who cannot make it on your own always wanting to spend someone else's hard earned money. Ironically liberals are some of the cheapest people walking.
To..joe"""
No ...
Hey, joe, I feel you right-wing no-nothing lunatics are destroying this once great country. Most of your kind lack understanding on how government runs, not just the U.S. but all western democracies. I'm sick of you bagger types whining about your your hard earned money. I'll bet you are in the 6-10% income tax bracket. If you want a great country, you have to pay. Stop bitching and be glad you live in the U.S.A.
r-bell, I assure you that I'm not in that bracket If you actually had a brain you would realize the problem is spending not revenue. Why should anyone have to pay more. The government is one big crack addict. You liberals should give more seeing you think the gov. spends wisely.
Every time I ask one of you anti-government types what spending should we cut, I get nothing but babble. They have no idea. Cutting spending too fast would devastate the economy. We do have a revenue problem. The Bush era tax cuts were a big mistake. He was handed a balanced budget with surpluses as far as the eye could see. He blew it. Between two unpaid wars and the tax cut, we've been on a downward spiral way before Obama. American's want services. We need to pay for them. It's that simple.
r-bell, again you are showing your stupidity, they are spending about 1.5 trillion a year more than they take in. Raising taxes will not cover that. Slash 2-3% across the board on all programs. Get welfare and food stamps under control, which combined with other programs exceeds 1 trillion a year.
Joe, you do know that defense accounts for around 600 billion, half out deficit? Welfare and food stamps, you anti government folks love to hate, is a drop in the bucket, less than 5%. I agree that we need to slow spending down but we also need more revenue. Remember, it was Cheney who said ' Reagan proves deficits don't matter'.
r bell, 1 trillion is 5%. I see that you excel at math and 600 billion is half?? I said slash 2-3% across the board on everything. Is that too hard to understand??
Joe our budget deficit, not the national debt, is a around 1.2 trillion. 600 billion is half of that. Nothing wrong with my math. 2-3% spending cuts across the board would amount to around 240- 400 billion. As you can see, we'd need more revenue. is that so hard to comprehend?
If you really want to save some money, all representatives and senators should be paid the national average wage.
The president should get twice the national average, and the vice president 1.5 times the national average. They should not be paid after they are out of office, should pay their own healthcare, and retirement. Cut all none essential public programs, cut defense by about 15%, eliminate all foreign aid. Deplete the government work force by about 25% through attrition. No government work shall be paid more than the national average wage.
Is it okay to tip H & R Block...
Who cares,,people will deal with it.
So my investment income goes up,along with its taxes
Harley, you have investments living off welfare?
All the more reason to implement The Fair Tax, a consumption only tax collected at the point of sale. Every one consumes not everyone has taxable income.
Obama is a tyrant wants the US to go over the cliff. He has no fear though. He can spend as he choses. It's the rest of us that get hurt
I think for that to happen we will need to get rid of money and go electronic. All money must be entered into the system. That will make all money in offshore accounts useless unless they put it back in the system.
How about this for fun. File your taxes when you find the law that says you have to pay federal income tax on wages or even fill out a 1040 for that matter. You still have some time. Make it a game with all your friends who can find the law first.
The federal tax laws are contained in the Internal Revenue Code, which was passed by the Congress. The Internal Revenue Code is also known as Title 26 of the United States Code, which is the compilation of all the laws passed by Congress.
The Internal Revenue Code is the law that requires people to pay taxes.
Peter explain to the people how the IRS is not part of the government and what Puerto Rico has to do with it. Why is it a code and not a law?
Ok screw it push your foot to the floor and drive America off the cliff also Dont raise the debt. Let America default and then chaos will ensue you will see another American Revoloution. Republicons have destroyed America. Time to take our country back.
Obama, Reid, and Pelosi put the car in D, drove it out of the ditch, and over the cliff. This is the Democrat Tax Increase and coming recession/depression. They own it.
Dagan, get back on your meds
Dagan: You either don't read or listen to anything but liberal NBC, MSNBC, ABC & CNN. If you had you would know that all the entitlements have been passed under a Democratic administration, which has been marching up to this castrophy for years..........the dems have never cared how things were going to get paid. All they have cared for is the idiots who would vote to keep them in office. And Dagan, I have a feeling you are one of them(the problem.)
Dagan, A little Prejudiced are we? Or suffering from Amnesia? The Dems have controlled the Government most of the last 8 yr's. I am neither a Rep or Dem but just a sad conservative. Why sad? Sad that Our Once Great Nation has come to this! One Nation Under God. We have chosen our fate and we are responsible for what happens!
republicans are the "sky is falling" party. leave it to these guys to create such drama. boner will cry and the democrats will solve the problem again. same old story...
How will Dems solve our financial problems as a country??? Do they plan on having the Tooth Fairy wave a magic wand??? We are in a deep financial hole. Promises have been made to the American public that cannot be kept. The longer we wait to make the tough choices and spending cuts, the more draconian the final solutions will need to be.
Why hasn't the Democratic Senate, run by Harry Reid, not passed a budget in almost four years nor even brought up for a vote the 30 plus bills from the house sitting on his desk? Isn't that his job? I mean he doesn't have to agree with the bills on his desk but should be bringing them up for discussion, isn't that how it is supposed to work? Why do Democrats want to destroy America?