The deal Congress struck to veer away from the fiscal cliff is now law. But, despite the clarity we have on taxes, we're all going to have to wait longer to file our 2012 returns, and receive refunds.
OK, hold on a minute: The fiscal cliff deal was signed into law in 2013. The increase in the payroll tax, as well as new tax rates and deduction caps for higher incomes, don't apply to 2012. So why can't you file yet?
The answer lies with the Alternative Minimum Tax (AMT) which limits deductions above a certain income level. It was originally designed to ensure that people with higher incomes paid at least some tax. But the income exemption wasn't indexed for inflation, so Congress has had to pass annual "patches" to make sure the AMT doesn't creep into lower tax brackets.
The last patch expired at the end of 2011, and there wasn't one passed for 2012. So, the permanent AMT fix included in the fiscal cliff deal will apply retroactively to 2012, an IRS spokesman told HLN. That spares millions of people who otherwise would have been subject to the AMT. But the IRS has to update its forms and processes for the new income exemption.
"Many people's tax calculations are touched by AMT, whether they pay it or not," the spokesman said.
The income exemption for the AMT now is $50,600 for individuals and $78,750 for married couples. It will be adjusted for inflation going forward. Without action from Congress, it would have dropped to $33,750 for individuals and $45,000 for married couples, potentially adding thousands of dollars to the bill for an additional 30 million taxpayers.
Taxpayers are responsible for figuring out whether they have to pay the AMT and it can be very complicated, which is why 75% of those who pay it hire a professional to do their taxes.
IRS says the fiscal cliff deal has to be "carefully studied" before it can announce when taxpayers can start filing returns.