As we move closer to the impending "fiscal cliff," we are also getting closer to tax filing time. If Congress doesn't act to change anything, how you file this year could change, and you could end up owing Uncle Sam.
The Alternative Minimum Tax is something to watch. Typically, Congress allows a "patch" to adjust for inflation. But they haven't extended a patch for 2013.
If they don't, 28 million households will pay more on their 2012 tax filings. If you fall into that AMT, that means you won't get a tax break for dependents, medical expenses, real estate taxes and state and local taxes. And it could tack an average $3,700 onto taxpayers bills for the year. It's also hard to say what salary range this AMT will affect.
Fiscal Cliff: Expanded Coverage
"It depends on not only the amount of income you have, but also what type of deductions you're taking. Normally, individuals that don't itemize their deductions and they just file the return, they take the standard deduction, will generally not fall into the AMT tax," says Carl Grassi, President of McDonald Hopkins.
The tax filing deadline could also be extended past April 15 if Congress makes a decision after the New Year. New forms would need to be issued, therefore, pushing back the normal deadline.
Grassi says he's been advising clients, act as if we will hit this fiscal cliff.
"Take the law as it is right now and assume that's what it's going to be and plan accordingly. If it changes, you can obviously adjust your planning."