December 04, 2007 // Franchising.com // (Virginia Beach, VA) Liberty Tax advises taxpayers to stay tuned for last-minute Congressional action that could result in Alternative Minimum Tax changes for individual filers, and pose possible filing delays for millions of early tax filers expecting refunds. The Senate is addressing the Temporary Tax Relief Act of 2007 that passed in the House, but stalled as Congress adjourned for the Thanksgiving break. President Bush has urged Congress to act promptly to pass this measure.
The good news: Senate approval of this act could extend the current AMT thresholds with a temporary one year "patch," and continue tax measures set to expire for tuition and education deductions, state and local taxes, and some educator's out-of-pocket expenses. Otherwise, the number of Americans paying the AMT may soar from 4 million to over 20 million people, and possibly impact half of taxpayers whose adjusted gross incomes are $75,000-$100,000.
Early filers could suffer too. Any December Congressional inaction could have a widespread effect on filing as the tax season gets underway in early 2008, possibly pushing the start of tax season back to early February. Some IRS forms affected by the AMT for child and dependent care credits, mortgage interest, and some other credits would be instantly outdated, and need immediate revision. The resulting delay could postpone tax refunds for millions of taxpayers, including lower and middle class taxpayers not affected by the AMT who normally file for early refunds. This could add up to $75 billion dollars of refunds delayed.
"We are monitoring this situation, and will provide free tax advice at all Liberty offices for anyone with questions on these issues," said John Hewitt, CEO and Founder of Liberty Tax Service.
AMT "patch" for 2007 - The AMT "patch" the House has approved would enact a oneyear fix to the situation by increasing the individual AMT exemption amounts so less income will be subject to AMT tax. If this does not happen, millions of additional taxpayers might have to pay the Alternative Minimum Tax when filing 2007 returns.
The original intent of the Alternative Minimum Tax as it was established by the Tax Reform Act of 1969 was to close some loopholes for America's wealthiest individuals to ensure that they paid their share of federal income taxes. Ironically, over the years more and more middle income taxpayers face a higher tax burden because the AMT has never been indexed for inflation. Those who pay the AMT may also lose deductions for state and local taxes, other deductions, and qualified tax breaks for having children.
"Extenders Would Be Extended Again" - Taxpayers may be able to continue taking advantage of deductions for college tuition and fees, and for state and local sales taxes. Educators could also be able to deduct $250 for out-of-pocket expenses and the research and experimentation tax credit would also be extended.
About Liberty Tax Service:
Liberty Tax Service is the fastest growing retail tax preparation company in the industry's history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service (www.libertytax.com) has prepared over 5,000,000 individual income tax returns and currently operates over 2,400 offices throughout the United States and Canada.
Liberty Tax Service provides computerized income tax preparation, electronic filing and refund loans. With an emphasis on customer service including audit assistance, a money back guarantee and free tax return checking, Liberty Tax Service is well known for its strong commitment to its client base. With 38 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation