The above is an excellent summary of the AMT dilemma by Prof Jim Maule of MAULED AGAIN from his post “When Congress Can't Do Things On Time”.
The IRS continues to comment that the longer Congress takes to pass the fix the longer it will take to process returns with AMT, or who would have had to pay AMT under the old rules – so taxpayers will have to wait longer than necessary to get their refund checks.
So where the fakawi?
CCH reports that “Senate Democratic leaders said on November 15 that they would attempt to pass the House-approved alternative minimum tax (AMT)/extenders bill (the Temporary Tax Relief Bill of 2007 - H.R. 3996) by unanimous consent (UC) before recessing for the Thanksgiving holiday. If the UC fails as expected, the Senate plans to turn to an amendment offered by Senate Finance Committee Chairman Max Baucus, D-Mont., that would provide a one-year AMT patch without offsets and a two-year extension of expiring tax provisions with the cost offset.”
The National Association of Tax Professionals has prepared four different scenarios detailing how late passage of AMT legislation will affect taxpayers.
In one of the scenarios a married couple with 2 children, wages of $75,000, itemized deductions of $26,000 and $6,000 in qualifying day care expenses would pay $5,489 more in federal income tax if there is no AMT fix! They would pay $4,289 in AMT (in addition to $3,511 in regular tax) – there would be no AMT with the “patch” – and lose the $1,200 Credit for Child and Dependent Care Expenses. Oi vey!
The taxpayers would get a refund with or without an AMT fix - $6,189 with and $700 without. However, if an AMT fix is passed it will take much longer than usual for the check to make its way to the taxpayers.
BTW, my comments on the dreaded Alternative Minimum Tax lead off the “View Point” column in the current (Fall 2007) issue of the National Association of Tax Professionals’ quarterly TAXPRO JOURNAL. Click here to check it out.