Better AMT letter from the IRS

[Terry D EA]

Here is a letter from the IRS that contains more information

IR-2007-209, Dec. 27, 2007

WASHINGTON — The Internal Revenue Service announced today that the upcoming tax season is expected to start on time for everyone except certain taxpayers potentially affected by late enactment of the Alternative Minimum Tax “patch.”

Following extensive work in recent weeks, the IRS expects to be able to begin processing returns for the vast majority of taxpayers in mid-January. However, as many as 13.5 million taxpayers using five forms related to the Alternative Minimum Tax (AMT) legislation will have to wait to file tax returns until the IRS completes the reprogramming of its systems for the new law.

The IRS has targeted Feb. 11, as the potential starting date for taxpayers to begin submitting the five AMT-related returns affected by the legislation. The February date allows the IRS enough time to update and test its systems to accommodate the AMT changes without major disruptions to other operations related to the tax season. As the IRS has said previously, it will take approximately seven weeks after the AMT patch was approved to update IRS processing systems completely.

Although as many as 13.5 million taxpayers will not be able to file their returns until Feb. 11, the effect of the delay may be lessened by the fact that under previous filing patterns only between 3 million to 4 million taxpayers file returns with the five affected forms during these early weeks in the filing season.

“We regret the inconvenience the delay will mean for millions of early tax filers, especially those expecting a refund,” said Linda Stiff, Acting IRS Commissioner. “We’ve taken extraordinary steps to figure out a way that we can start the filing season on time for most taxpayers, including some using AMT-related forms. Our goal has always been to make sure we can accurately process tax returns while getting refunds to taxpayers as quickly as possible.”

The February delay caused by the AMT patch will affect taxpayers using any of these five forms:

Form 8863, Education Credits.

Form 5695, Residential Energy Credits.

Form 1040A’s Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers.

Form 8396, Mortgage Interest Credit.

Form 8859, District of Columbia First-Time Homebuyer Credit.

While these five forms require significant additional reprogramming due to the AMT patch, the IRS has been able to reprogram its systems to begin processing seven other AMT-related forms, including Form 6251, Alternative Minimum Tax – Individuals. Taxpayers filing these seven forms should not experience delays in filing, and the IRS expects to begin processing those returns starting on Jan. 14.

Electronic returns involving those five forms will not be accepted until systems are updated in February; similarly, paper filers should wait to file as well. All other e-file and paper returns will be accepted starting in January. The IRS urges affected taxpayers to file electronically in order to reduce wait times for their refunds. E-file with direct deposit gets refunds in as little as 10 days, while paper returns take four to six weeks.

“E-file is a great option for everyone, especially if they are affected by the AMT,” said Richard Spires, IRS Deputy Commissioner for Operations Support. “Filing electronically will get people their refunds faster, and e-file greatly reduces the chances for making an error on the AMT or other tax issues.”

In addition to filing electronically, the IRS urges taxpayers to take simple steps to avoid problems:

Taxpayers filing electronically should make sure to update their tax software in order to get the latest AMT updates.

Taxpayers with $54,000 or less in Adjusted Gross Income can use Free File to electronically file their returns for free. Free File will only be available by visiting the official IRS web site at IRS.gov. In all, 90 million taxpayers qualify for this free service.

Taxpayers who use tax software to print out paper copies of tax forms should make sure they update their software before printing out forms. Taxpayers using paper forms can also visit IRS.gov to get updated copies of AMT forms.

The IRS has created a special section on IRS.gov to provide taxpayers with additional information and copies of updated forms affected by the AMT. In recent days, the IRS has posted updated copies of all forms affected by the late enactment of the AMT patch by Congress.

The IRS also reminds taxpayers that printed tax packages, which will begin arriving in the mail around New Year’s, went to the printer in November before the AMT changes were enacted. The packages reflect the law in effect at the time of printing. The tax packages include cautionary language to taxpayers that late legislation was pending.

The IRS is also working closely with tax professionals and the tax preparation software community to make sure they can help taxpayers with all of the latest developments on the enactment of the AMT patch and other tax changes.

“The IRS is going to continue to do everything it can to make this a fully successful filing season for the nation’s taxpayers,” Stiff said. “We will continue to work to keep taxpayers up to date and make this situation as easy as possible for everyone.”

[Slappy Tax]

So, if you have a client with daycare credit who would normally file a 1040A, you can get around the AMT delay by forcing the software produce a 1040 and 2441, right?

[joanmcq]

ATX lets you choose what form to use. Just use the 1040.

[Slappy Tax]

I just find it curious that the 1040A with childcare credit is affected by the AMT patch, and the 1040 with childcare credit containing the same information isn't affected. I'm curious about it but not curious enough to go digging through resources to figure it out. Come to think of it, I'm not really that curious about it afterall. I guess kind of micro-curious.

[GeneInAlabama]

I don't ever use the 1040A. I can prepare a 1040 a whole lot faster than I can a 1040A because I am a lot more familiar with it. I don't see any advantage of the 1040A over the 1040. I don't charge by the form. I charge according to how much time I spend on the return and it's to my client's advantage that I use the form I am familiar with.

[Slappy Tax]

Other responses have said pretty much the same thing--just stick with the 1040 and don't bother with the 1040A. That's not a bad technique, but the software I use takes the inputs and produces the simplest form allowed, 1040-EZ, 1040A, or 1040, unless I force it to default to the 1040. I'm like you, I don't charge extra for a 1040 over a 1040A if they both require the same preparation time. I just have always let the software do its thing. I might rethink that though, especially when it comes to 1040-EZs. They're more difficult to explain to a client when it comes to explaining the combination of the standard deduction and the personal exemptions. I'm still not sure why the 1040A Schedule 2 would be hindered by the AMT patch, whereas the 1040/2441 combination wouldn't.

[kcjenkins]

I am not sure, but my guess would be that it has to do with reprogramming the IRS computers, for that specific form, rather than anything to do with the law itself.