Staffers at Liberty Tax Service in Kinston are spending the final days of 2012 updating software, preparing to hire Liberty’s signature “wavers” — and waiting on Congress to get its financial house in order before going over the fiscal cliff.
“It’s all hinging on what Congress is going to do,” franchise owner Wendy Rhodes said Thursday.
President Barack Obama and members of Congress must reach a deal on federal spending and tax rates before next Tuesday, when massive tax hikes worth about $500 billion and spending cuts worth about $200 billion automatically kick in.
Unless Congress acts to prevent it, middle-class taxpayers could become ensnarled in the mechanics of the Alternative Minimum Tax, originally devised to keep the rich honest.
“You’re going to have higher taxes across the board for all taxpayers. … You’re looking at, somebody with a $20,000 income is going to have to pay an additional $1,000 in taxes annually,”
The Internal Revenue Service has warned Congress of major impacts to taxpayers in 2013 beyond the bottom line. Pushing back the acceptance date for early returns could mean a delay in receiving a tax refund.
Acting
“When Congress takes action well after this planning process is underway, there is potential for substantial disruption to the filing season ahead,” Miller wrote.
The Alternative Minimum Tax was established in 1969 to ensure taxpayers at certain income levels paid income tax and could not avoid all loopholes.
The income level set in the late 1960s was not set to be adjusted for inflation, though, and Congress must pass a regular “patch” to ensure lower-income taxpayers are not ensnared by the
Miller stated in his letter the most recent patch expired
With no patch for 2012, though, the threshold will be lowered to $33,750 for individuals and $45,000 for married couples.
The
“Taken together, the changes to the
If Congress does not patch the
She said many taxpayers are not aware of the delay in processing returns and receiving refunds, and “they are going to be in for a rude awakening when they come in.”
She said the
“Everything’s still waiting on Congress,”