{"id":22465,"date":"2012-11-01T20:34:26","date_gmt":"2012-11-01T20:34:26","guid":{"rendered":"https:\/\/resource-center.hrblock.com\/newsroom\/hr-block-advises-prepare-now-for-taxmageddon-dont-fall-off-fiscal-cliff\/"},"modified":"2023-03-01T13:18:45","modified_gmt":"2023-03-01T19:18:45","slug":"how-to-not-fall-off-the-fiscal-cliff","status":"publish","type":"newsroom","link":"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/newsroom\/irs\/tax-law-and-policy\/how-to-not-fall-off-the-fiscal-cliff\/","title":{"rendered":"H&R Block advises prepare now for Taxmageddon, don\u2019t fall off fiscal cliff"},"content":{"rendered":"

AMT, expired tax breaks impact taxpayers of all income levels<\/h2>\n

Whether it is called \u201cTaxmageddon\u201d or the \u201cfiscal cliff,\u201d millions of taxpayers at all income levels are at risk of paying more in taxes this year. For some, this could mean owing money to the IRS instead of getting a tax refund as they have previously.<\/span><\/p>\n

\u201cThe risks for individuals this year are that the alternative minimum tax (AMT) could revert to pre-2001 levels and many common tax breaks millions rely on may not be available. Taxpayers soon could find themselves in difficult financial positions,\u201d said Kathy Pickering, executive director of The Tax Institute at H&R Block<\/a>. \u201cBecause the extension of these tax breaks requires action by Congress and the President, there isn\u2019t much taxpayers can do to avoid this situation. However, they should be aware of what tax breaks may and may not be available for 2012 in order to plan for their impact.\u201d<\/p>\n

34 million could owe additional tax if AMT not raised for 2012 income levels<\/h2>\n

Unless there is legislative action, 34 million taxpayers could be hit with the alternative minimum tax<\/a> \u2013 many for the first time. This could mean that in just two months, taxpayers who had grown accustomed to getting a tax refund could be hit with a hefty tax bill.<\/p>\n

Whether or not the AMT will be patched for inflation (the last patch expired Dec. 31, 2011) is one of the biggest unknowns facing taxpayers, yet many aren\u2019t aware of its impact on their tax liability.<\/p>\n

\u201cThe AMT is complex. It can affect taxpayers for different reasons and it is not always clear when or if it will apply,\u201d Pickering said. \u201cAMT may kick in because of the taxpayer\u2019s income, certain deductions, or even because the taxpayer claimed certain credits.\u201d<\/p>\n

According to analysis by The Tax Institute, if the AMT is not patched, a family earning $85,000 with two children in college could go from a tax refund of $1,056 tax refund to owing $1,400.<\/p>\n

Additional analysis found that taxpayers in high-income tax states \u2013 California, New York and New Jersey \u2013 would be most affected by the AMT if it is not fixed by Congress before the end of 2012.<\/p>\n

Expiring tax breaks could hit middle class families with additional $4,000 tax burden<\/h2>\n

2012 tax bills will be larger for millions of taxpayers since more than 70 tax provisions expired Dec. 31, 2011, and have not been renewed. These tax breaks impact all income levels and touch college<\/a> students, teachers and homeowners. Following are some of the more popular expired tax breaks:<\/p>\n