- 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

How Financial Planners go Grocery Shopping

Learn to shop smart and save.

View Course »

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

TurboTax Articles

Essential Tax Forms for the Affordable Care Act

The Affordable Care Act (ACA), also referred to as Obamacare, affects how millions of Americans will prepare their taxes in the new year. The law now includes penalties for all who haven?t obtained health insurance -- and those penalties are expected to be paid at tax time. The ACA also provides tax credits to help people pay for insurance, and you can claim those credits when you file your taxes. The Internal Revenue Service (IRS) has introduced a number of tax forms to accommodate the ACA.

Are You Exempt From Health Care Coverage?

The Affordable Care Act, or Obamacare, is an individual mandate that requires all eligible Americans to have some form of basic health coverage by 2014. Those without insurance will receive a penalty when they file their tax returns ? that is, unless they have an exemption. TurboTax's Exemption Check can help you find out whether or not you qualify for an exemption.

Mortgage Refinance Tax Deductions

When refinancing a mortgage to get a lower interest rate or obtain more favorable loan terms, you're really just taking out a new loan and using the money to pay off your existing home loan. In general, the same tax deductions are available when you're refinancing a mortgage as when you're taking out a mortgage to buy a home.

How to Determine if You Have Minimum Essential Coverage (MEC)

The Affordable Care Act, also known as Obamacare, requires most Americans to have health insurance that meets a government standard known as "minimum essential coverage," or MEC. Whether your insurance qualifies as MEC depends not on the plan itself, but on how you obtained your coverage.

Rental Property Deductions You Can Take at Tax Time

Rental property often offers larger deductions and tax benefits than most investments. Many of these are overlooked by landlords at tax time. This can make a difference in making a profit or losing money on your real estate venture. If you own a rental property, the IRS allows you to deduct expenses you pay for the upkeep and maintenance of the property, conserving and managing the property, and other expenses deemed necessary and associated with property rental.

Add a Comment

*0 / 3000 Character Maximum

78 Comments

Filter by:
Scott Bartel

you should have expected us (this.)

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

tanishasalary:
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
tanishasalary

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
nsheats

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
JimB

WHEN HAS THE U.S. FEDERAL GOVERNMENT SEND OUT REFUND TAX CHECKS ......

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

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
jden1952

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
rjbhighc

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
ncaok

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
cowboy

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

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