Alternative Minimum Tax (AMT) – How It Affects Western New York Taxpayers in 2008

According to the IRS, they expect to be able to begin processing returns for the vast majority of taxpayers in mid-January. However, as many as 13.5 million taxpayers using five forms related to the Alternative Minimum Tax (AMT) legislation will have to wait to file tax returns until the IRS completes the reprogramming of its systems for the new law.

IRS has targeted Feb. 11, as the potential starting date for taxpayers to begin submitting the five-related returns affected by the legislation.

Returns that include the following forms cannot be filed until Feb. 11, 2008:

• Form 8863, Education Credits
• Form 5695, Residential Energy Credits
• Schedule 2, Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers
• Form 8396, Mortgage Interest Credit
• Form 8859, District of Columbia First-Time Homebuyer Credit

While these five forms require significant additional reprogramming due to the AMT patch, the IRS has been able to reprogram its systems to begin processing seven other AMT-related forms, including Form 6251, Alternative Minimum Tax – Individuals.  Taxpayers filing these seven forms should not experience delays in filing, and the IRS expects to begin processing those returns starting on Jan. 14.

Electronic returns involving those five forms will not be accepted until systems are updated in February; similarly, paper filers should wait to file as well. All other e-file and paper returns will be accepted starting in January. The IRS urges affected taxpayers to file electronically in order to reduce wait times for their refunds. E-file with direct deposit gets refunds in as little as 10 days, while paper returns take four to six weeks.

In addition to filing electronically, the IRS urges taxpayers to take simple steps to avoid problems:

•  Taxpayers filing electronically should make sure to update their tax software in order to get the latest AMT updates.
  
• Taxpayers with $54,000 or less in Adjusted Gross Income can use Free File to electronically file their returns for free.  Free File will only be available by visiting the official IRS web site at IRS.gov. In all, 90 million taxpayers qualify for this free service.
  
• Taxpayers who use tax software to print out paper copies of tax forms should make sure they update their software before printing out forms.  Taxpayers using paper forms can also visit IRS.gov to get updated copies of AMT forms.

The IRS has created a special section on IRS.gov to provide taxpayers with additional information and copies of updated forms affected by the AMT.  In recent days, the IRS has posted updated copies of all forms affected by the late enactment of the AMT patch by Congress.

The IRS also reminds taxpayers that printed tax packages, which will begin arriving in the mail around New Year’s, went to the printer in November before the AMT changes were enacted.  The packages reflect the law in effect at the time of printing.  The tax packages include cautionary language to taxpayers that late legislation was pending.

The IRS is also working closely with tax professionals and the tax preparation software community to make sure they can help taxpayers with all of the latest developments on the enactment of the AMT patch and other tax changes.

For More Information: http://www.irs.gov/ 
 

AMT Reform: Congressman Reynolds' Stealth Tax Relief
 

From my seat on the tax-writing Ways and Means Committee, I am leading the fight in Congress to pass meaningful relief from the Alternative Minimum Tax (AMT), or, as I like to call it, The "Stealth Tax."  To protect middle-class taxpayers from the Stealth Tax, I've introduced the "Stealth Tax Relief Extension Act of 2007" that extends for an additional year middle-class AMT relief.  This bill will protect thousands of Western New Yorkers from falling victim to this Stealth Tax, saving these middle-class families an average of $3,860.  Click here to see how much the Stealth Tax costs Western New York taxpayers by county.

While Congress must certainly continue to work toward a permanent solution on the AMT issue, extending this temporary AMT relief is an urgent priority for middle-class taxpayers in Western New York.   

AMT Background and Information  

The AMT was originally enacted in 1969 to prevent a small percentage of taxpayers with very high incomes from paying little or no federal income tax.  However, because the AMT was never adjusted for inflation, it is now sneaking up on more and more middle class taxpayers each year as they climb the income ladder. 

In short, although The Stealth Tax was never intended to hit the middle class, it is now unleashing an unprecedented sneak attack on millions of middle-income individuals and families, including hundreds of thousands of New Yorkers.

• Stealth Tax Relief Extension Act of 2007
• Western New York Stealth Tax Costs
• Factors Causing the Stealth Tax
• Are you a "Stealth Tax" Victim? Find out with the IRS's AMT Calculator