A last minute Congressional change to the tax code is both good news and bad news to the average taxpayer. Congress voted to approve a bill that puts in place a one-year fix of the AMT (alternative minimum tax) which was created to make sure the ultra rich did not totally avoid paying taxes. But since it was never adjusted for inflation, it has been hitting more middle and upper-middle class taxpayers every year.
The Good News
Upwards of 20 million US taxpayers will escape the AMT this year. About 4 million taxpayers owed the AMT in 2006 and about the same number of taxpayers will owe the AMT for 2007. Without the fix, more than 20 million taxpayers would have seen an average increase in taxes of $2,000.
The Bad News
Lawmakers waited so late in the year to approve the bill that many taxpayers will have to wait until March to get their refunds. The IRS usually begins processing tax returns in mid-January, but the schedule will be delayed this year because the IRS will need about seven weeks to reprogram its computers to reflect the last minute changes to the tax law. What does this mean to you? Many taxpayers who normally file their taxes in late January and early February will end up waiting four weeks longer than usual to receive a refund.
The bottom line here is don’t hold your breath for that early refund and don’t try to hold off on your credit card payments until that refund comes. It could be a while. For more useful articles on credit card debt and personal finances please visit Reduce Credit Card Debt
Monday, January 14, 2008
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1 comment:
Better advice:
Change your employer's tax witholding so you owe the IRS money at the end of the year. Why let them hold onto your money, interest free, all year, while you are paying interest on your credit cards? Pay that money towards your credit cards as you earn the money instead of in one big chunk at the end.
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