Some tax reform experts have alluded that the plan to do away with the alternative minimum tax may have much more grave consequences than just keeping it. Accountants and financial advisors are working way into overtime as millions of American taxpayers scramble to file their taxes accrued to the Internal Revenue Service before January 1, 2018. On the first day of next year is when the Republican-sponsored bill on tax reform can sharply reduce the amount that is deductible from federal tax bills.
Top Republican lawmakers said that they expect the GOP tax bill to be passed by Congress this week. The tax reform law curbs the amount of local, property and state taxes that can be deducted from the federal taxes by American taxpayers. The deductible tax amount from federal taxes is now at $10,000.
The average American taxpayer claimed more than $27,000 in deductions in 2015 after itemizing on their tax bills. While the deadline to file taxes for 2017 is on January 15, 2018, most Americans are very eager to complete the payment of what they owe to the IRS. One of the accountants from PWC, Tom Holly, has admitted receiving hundreds of calls from Americans who want to complete their tax obligation to the IRS before the stipulated deadline to avoid fines.
Holly added that this Christmas holiday is set to be a very busy for financial analysts and tax experts. Holly is the head of the assets and wealth management at Price Waterhouse Coopers. The managing director of Abbot downing’s wealth planning at Wells Fargo, Lisa Featherngill said that she was skipping a football game at Valero Alamo Bowl in Texas to work on December 28.
According to Featherngill, a host of wealthy Americans and their tax experts were working out to see if it made financial sense to pay all their itemized taxes for 2107 before the year closes. She added that affluent citizens are also working to with their accountants to see whether or not to itemize their taxes at all. Some citizens from states that have high taxes may ultimately pay the alternative minimum tax.
This is especially the case for citizens in such states who have an annual income above $100,000. The alternative minimum tax limits personal tax deductions that a taxpayer can take against their federal income tax. If the bill is passed and assented to law by the US president, it could become the most significant tax reform in three decades.