Wednesday, January 02, 2008

How the AMT Will Affect 08 Tax Filing

With Congress passing last minute changes to the Alternative Minimum Tax (AMT), expect the upcoming tax season to get quite confusing. The IRS expects tax season to begin as usual this January, except for the taxpayers affected by last minute AMT "patches." They estimate over 13.5 million taxpayers will use IRS forms related to the AMT. These taxpayers will have to wait to file their income tax returns until the IRS can reprogram its system.

The IRS hopes they will be able to begin accepting these tax returns by no later than February 11, 2008. They claims this date allows enough time to properly update and test their systems without disturbing other tax season related operations.

Therefore, federal tax returns that include the following forms cannot be filed until February 11th, 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

The AMT became part of the U.S. tax code with the Tax Reform Act of 1969. Originally, Congress designed the AMT to target a small number of high-income taxpayers that could claim so many deductions they owed little or no income tax. However, the AMT gained a lot of negative attention as an increasing number of middle-income taxpayers became subject to the AMT.

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