Estimated read time: 2-3 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
Paul Nelson, KSL NewsradioThe president is asking Congress to finish a tax plan. If no deal is reached, millions of Americans would be delayed in filing their taxes. How does this affect you personally?
If the IRS delays the start of the tax filing season, analysts say that means you'll have a delay in getting your refund. As you can imagine, that's not sitting well with many Utahns.
One man says, "I like to have it in the bank and start earning interest on it as soon as I can, since they (the IRS) have had it all year anyway."
One woman says, if she has to wait that's fine, but she doesn't want to wait too long. She said, "If it's a substantial amount of time, then, yeah, that's not very fair."
The delay will happen if President Bush and Congress don't agree on new tax laws. But, even if they don't agree until after the first of January, why would there be a delay?
Tax law attorney Craig Carman said, "The Internal Revenue Service, they need to amend forms. Software companies that produce software like Turbo Tax have to rewrite their programs."
Another problem with the delay is that it could stop the blocking of the unpopular Alternative Minimum Tax (AMT). Carman says not everyone will fall under this tax, but the people who do will have to pay big.
"Estimates that I have heard, most people that have to pay an alternative minimum tax will pay between five and six thousand dollars additional tax above and beyond what they would normally pay," Carman said.
The AP says 25 million taxpayers would be hit by the AMT this year compared to only four million last year. Carman has theories as to why.
"Some of the itemized deductions that are being added back to income, or disallowed in a sense, are the type of expenses most families would have," he said.
Basically, this is how it works. They take your gross income, including things you would normally be able to deduct, like mortgage interest, medical expenses and even taxes you've already paid. Then, you deduct a certain amount, depending on whether you're filing single or jointly. Then, you multiply that number by 26 percent. After that, you subtract $3,500, then subtract the tax you would normally pay. Boom, you have your alternative minimum tax, clear as mud.
"It's a fairly complex calculation, but the bottom line is they're going to be paying more taxes for people who normally wouldn't anticipate that they would be subject to an additional tax," Carman explained.
The AMT was created in 1969 to ensure highly wealthy families couldn't avoid paying taxes completely.