- Days left

Will Tax Refunds Go Out on Time? Late AMT Fix Has IRS Scrambling

IRS tax refund checkThe fiscal cliff may be a thing of the past, now that the president has signed into law the compromise bill that the Senate and House passed on New Year's Day. But for as many as two-thirds of all taxpayers, the verdict is still out on whether they'll get their tax refund checks on time.

In late December, the IRS said that as many as 100 million taxpayers could face delays in getting their tax refunds if the fiscal cliff weren't resolved before the end of 2012. Unless certain tax-law changes that the IRS was counting on were passed, IRS computers would need to be updated. That reprogramming job could have forced taxpayers to wait until late March before they could even file their returns, let alone expect refunds.

The complications were caused by the alternative minimum tax, which was originally intended to prevent the very rich from using loopholes and credits to avoid the tax man altogether. But time and inflation expanded the number of people who fell under the AMT, to the point where an estimated 30 million middle- and upper-middle income taxpayers would have been hit by higher tax bills because of it.

In past years, lawmakers had always passed an annual "patch" to the AMT that made inflation adjustments, preventing the tax from applying to those millions of ordinary taxpayers, and the IRS assumed that a similar provision would eventually be passed for 2012. But with the 2012 AMT patch in limbo during the fiscal cliff crisis, tens of millions of taxpayers could have been subject to the tax for the first time.

A Partial Solution

The newly passed law addresses the AMT in a more lasting fashion, making inflation adjustments for 2012, and making future adjustments automatic -- no further action from lawmakers required. That will save those 30 million or so taxpayers from having to pay an average of about $4,000 extra to the IRS this spring.

But even now that the fix has been made, the IRS is reluctant to say whether it will be able to avoid a tax refund crisis. Although the IRS has issued new withholding guidance that reflects the provisions of the new law, it says that it's "reviewing the details of this week's tax legislation and assessing what impact it will have on this year's filing season."

Because the inflation adjustment in the new law matches what the IRS expected, there's reason to be optimistic that the IRS will be able to process returns as expected. Still, until the IRS says when taxpayers can start filing their returns, there's also reason to fear that refunds could come later this year.

For more on taxes and your money:

Motley Fool contributor Dan Caplinger appreciates getting an AMT break. You can follow him on Twitter @DanCaplinger.

Increase your money and finance knowledge from home

Timing Your Spending

How to pay less by changing when you purchase.

View Course »

Building Credit from Scratch

Start building credit...now.

View Course »

TurboTax Articles

Cities with the Lowest Tax Rates

The total amount of tax you pay reaches far beyond what you owe the federal government. Depending on where you live, most likely you're required to pay additional taxes, including property and sales tax. The disparity between the amount of tax you pay in a low-tax city and that in a high-tax city can be dramatic. Living in any of these 10 cities could save you a bundle, although the exact amount may fluctuate based on your income and lifestyle choices.

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

Add a Comment

*0 / 3000 Character Maximum


Filter by:
Scott Bartel

you should have expected us (this.)

February 21 2013 at 12:26 PM Report abuse rate up rate down Reply

You havent seen frustrating yest. Try this for frustrating http://blog.turbotax.intuit.com/2013/01/30/what-is-the-current-irs-status-on-processing-returns/#comments
And im one of the people who still havent received my taxes! Now thats frustrating!

February 19 2013 at 8:29 PM Report abuse rate up rate down Reply

This is frustrating! You work your ass off all year long, then at the end of the year when you are supposed to get your refund back there is all this bs about it! I work everyday for mine. I have every right to be upset about all these last minute changes. I feel like they are doing this crap on purpose. And there is nothing we can do about it but complain and be frustrated! SIGNED FRUSTRATED TAX PAYER!

January 30 2013 at 9:57 PM Report abuse rate up rate down Reply

I would guess that most of those complaining here did not file a correct return or well uh lets say fudged a little.
Besides if you have to rely on the timelyness of any govt function...you ain't got the sense God gave geese or New Republicans.

A Real Republican

January 25 2013 at 11:44 PM Report abuse rate up rate down Reply


January 25 2013 at 5:21 PM Report abuse rate up rate down Reply

I still haven't received my refund check of $1000 from my 2011 tax refund. I got a letter in May, 2012, stating I will hear in 6 weeks. It is now 8 months later and I still haven't heard anything. No number to call or anything. I went on line to find out the IRS has done this to tens of thousands of people. Random letters like this go out every year. Some of the people commenting on line have been waiting upwards of 2-3 years after receiving a letter like I did. This is ludicrous, I am a senior on a small social security income and can surely use the refund check that is due me.

January 25 2013 at 3:05 PM Report abuse rate up rate down Reply
Sara Curtis

I have heard that, because of TRS (teacher retirement), the IRS isn't processing teacher's returns until late February. Does anyone know if this is true?

January 22 2013 at 11:34 AM Report abuse rate up rate down Reply

Yeah, the tax laws are really complicated, to the point even the IRS doesn't understand them. So why doesn't Congress fix it? Because THEY WANT IT COMPLICATED! And one of the biggest tax cheats in Congress is Charlie Rangel, the head of the committee that actually WRITES the tax laws!!! The only ones not complaining are those who don't PAY taxes, but manage to get a refund every year for whatever reason.

January 20 2013 at 1:46 AM Report abuse +2 rate up rate down Reply

I'll bet these Clowns in Washington DC get their Check's in time . While we are at it . Why are they Never get a Pay-cut ? like so many of us regular Folks . Puls why are these Idiots get Pension increase's ? While the rest of us get "ZERO " ....

January 19 2013 at 4:27 PM Report abuse +2 rate up rate down Reply

I went in on January 3 to get my 1040 book and it wasn t available...I m suppose to be timely.Why can t they?

January 08 2013 at 5:49 AM Report abuse +1 rate up rate down Reply
1 reply to ncaok's comment

You can get it online @ any time. I did.

January 25 2013 at 4:45 PM Report abuse rate up rate down Reply