NEW YORK (CBS 2) — Unless Congress acts quickly you could find yourself with an extra burden you didn’t expect.
Millions of metropolitan area residents might want to scale back on their Christmas shopping this year because the taxman could be taking a much bigger bite out of your income than you think.
“It’s a back-door approach to gotcha again,” CPA Ellen Minkow told CBS 2’s Marcia Kramer.
What Minkow is talking about is something Uncle Sam calls the alternative minimum tax, the AMT. Unless Congress enacts something called a “patch” 25 million Americans – including many in our area — could find they owe way more than they anticipated.
“Between $3,000 and $5,000,$3,000 and $6,000 for somebody earning about $80,000 to $120,000. You can go up as much as $10,000, $15,000 if you get in the $240,000, $250,000 range,” CPA Fred Slater said.
Take a single mom with two children making $65,000. If Congress enacts the patch she gets a $340 refund, but if they don’t do the patch she owes $2,725.
A married couple with two children and an $85,000 income would get a $642 refund with the patch. No patch means they owe $3,864.
Taxpayers say Congress better get fix things … or else.
“I think there’s going to be more changes in the government,” said A.J. Landsman of Midtown. “If they don’t fix it there’s going to be some changes.”
“Absolutely fix it. We can’t afford any more taxes at this point. I mean the economy is doing bad enough. The only way you’re going to get people back in the stores is if you put the money in their pocket,” added Joe Tuite of Staten Island.
“Raising taxes is certainly not the way to get people to spend more money in the economy,” said David Mitchell of Midtown.
“I have a magic accountant,” said Peter Von Berg of the Upper West Side.
Unless Congress acts by the end of the year, next April 15, tax day, is going to be a whole lot more painful.
The AMT tax is so unpopular that the chairman of the White House Deficit Reduction Commission is proposing its elimination as part of a total restructuring of the tax code.