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Wednesday, July 30, 2014

Alternative minimum tax could delay some tax refunds this year

Thursday, January 3, 2008

As many as 13.5 million people will have to wait until Feb. 11 to start filing

SIKESTON -- Even though tax refunds will be delayed for some people this year, all taxpayers can still follow a few tips to make the filing process smoother for everyone involved, the Internal Revenue Service and local tax preparers say.

"Most people know when they come in what (information) to bring and have been filing tax returns for a while," said Jennifer Thurman, tax preparer for At Tax Time in Sikeston.

Thurman said she's starting to receive phone calls about tax filing.

"People are wanting to know how much they're going to get back and when they will get it back," Thurman said.

Causing some concern was the alternative minimum tax. On Dec. 19 Congress put a one-year freeze on growth of the alternative minimum tax, shielding many middle- and upper-middle income taxpayers from first exposure to the tax. But Congress' late action means the IRS won't be able to start processing five AMT-related forms until February, delaying potential refunds for those people until that month, the nation's tax collection agency announced Thursday.

As many as 13.5 million people will have to wait until Feb. 11 to start filing with the five AMT-related forms, but the IRS said filing patterns show only between 3 million to 4 million of those people file during the early tax season anyhow.

"That's a lot smaller number than was expected to be affected," Thurman said.

The alternative minimum tax was passed in 1969 and was aimed at about 155 very wealthy families who used deductions to avoid paying any federal income tax. The AMT disallows certain deductions and credits. It was not adjusted for inflation; as a result, over the years it has hit a growing number of middle-income taxpayers.

More than 4 million were subject to it in the 2006 tax year. Without the congressional fix, more than 20 million families would have been faced with an extra $2,000 tax hit on average.

The delay affects taxpayers using any of these five forms: Form 8863, Education Credits; Form 5695, Residential Energy Credits; Form 1040A's Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers; Form 8396, Mortgage Interest Credit; and Form 8859, District of Columbia First-

Time Homebuyer Credit.

Phil Cluck, owner of Fast Tax of Southeast Missouri in Sikeston, said the education credits and child care expenses forms are the most popular of the delayed forms.

"These people can always file a tax return and do an amended return later," Cluck said. Software will help prevent the filing of electronic or paper returns with these forms on them until Feb. 11, Cluck said.

The IRS said it expects to be able to begin processing returns for the vast majority of taxpayers in mid-January.

Cluck recommended taxpayers to still file as early as possible, adding electronic filing is still the fastest and most accurate way to file because people get their refunds faster and it reduces the chances of making an error.

"The worst possible thing you can do is mail it," Cluck said, adding it can take four to six weeks to get a refund compared to 10 days with e-filing.

Bring all W-2 forms from all jobs worked throughout the year, or if they have unemployment or pulled out from a pension or retirement, get a 1099-R form for that, Thurman suggested.

Taxpayers should ask questions if they have concerns about their taxes, Thurman said. Call the tax preparer beforehand to make sure you have all the documentation needed, she said.

"This makes it faster when you come in," Thurman said.

> The IRS recommends taxpayers start gathering their records into one place and make appropriate changes to Social Security number records, such as if a baby was born this year or if someone got married or divorced.

> For those who've changed their names due to marriage or divorce, they should make sure to let the tax preparer know because sometimes it takes a while for the change to take effect by Social Security, Thurman said.

> Individuals who purchased and installed energy-efficient windows, insulation, doors, roofs and heating and cooling equipment during 2007 could receive a tax credit of up to $500, the IRS said.

> Remember the IRS doesn't request personal taxpayer information through e-mail so those who get an e-mail claiming to be from the IRS that asks for personal or financial information, it may be identity thieves. If one of these e-mails is received, send it to the IRS at phishing@irs.gov.

The Associated Press contributed to this article.