Finance expert Mike Periu on the IRS’ recent warning to Congress about the need to address the Alternative Minimum Tax issue.
Steven T. Miller, Acting Commissioner of the IRS, has warned Congress that failure to address changes in the Alternative Minimum Tax (AMT) that would take place under the fiscal cliff will have devasting consequences for tax filers. The AMT is a second way to calculate your tax liability that limits deductions and ensures that more people pay more income taxes. Its original purpose was to target very high-income earners who found loopholes to avoid paying taxes. But the law was not indexed for inflation, which eventually meant millions of people had to pay AMT. This problem was fixed as part of the Bush tax cuts 12 years ago, but the fix expired in 2010 and was only extended through tax year 2011. This means that tax returns for tax year 2012 would revert back to the previous thresholds and over 32 million households would owe AMT, up from 4 million today. Making matters worse, Commissioner Miller indicates that the IRS’ computer system isn’t ready to handle this change in the AMT and would probably need months to prepare it. As a consequence, people who owe AMT would not be able to file their tax returns until late March.
About small business finance expert Mike Periu
Mike Periu has experience in small business finance. He founded Proximo, LLC a company that offers consumer and small business training services focused on technology and money.
Mike Periu teaches individual empowerment through entrepreneurship and financial literacy. He has appeared 500+ times on television and radio. Visit the Reach and Media pages of his website to learn more about where he has appeared.
You can read more of Mike’s articles on his blog or at American Express OpenForum, Yahoo! Finanzas and the Huffington Post.
Mike has a degree in International Business and Finance which he received at Georgetown University in Washington, DC. He received a Fellowship from the Kauffman Foundation for the Labs for Enterprise Creation program in Kansas City.
