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Fiscal Cliff Tax Tips

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    Urban Institute senior fellow Howard Gleckman explains how the fiscal cliff will impact your taxes.

  • Duration 4:16
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House speaker Boehner and President Obama are still discussing.

The fiscal cliff but with no deal in place in of course now -- be getting rejected by the White House today.

-- the taxpayers may be just unable to file their tax returns in 2013.

Every incident senior fellow and tax -- senator Howard black -- here with some ideas of what to expect when you file this year.

You know our I find it so appalling that -- in the same place again -- frankly worse.

This time again this year we don't know about an AMT -- about whether they're gonna extend all those -- -- hundred billion dollars worth of Extenders out there.

Were -- -- -- here wondering.

Welcome to Washington this is the world -- live in every day.

But that's that's very unsettling -- sell -- is doing anything about this the AMT bothers me the most.

Close to thirty million people will be affected by this.

Near the conspirator in me thinks that this is Washington's -- pushing a -- -- a flat tax and they're gonna let it go.

But I think the reality is they will pass -- Pat's right.

I agree I think there will -- so the deal here is what's important understand is most of the tax cuts are arguing about will happen next year.

These are tax cuts that would take a factor not take effect in 2013.

And they affect people when they file their tax returns in April of 2014.

The Alternative Minimum Tax is different the Alternative Minimum Tax goes from year -- year with what they call patch.

That patch keeps the AMT to -- to adjust for inflation.

And by doing that it keeps about 28 million people mostly middle income and upper middle income people with large families are live -- high tax states off of the AMT.

That expired actually at the beginning of 2012.

So that's over for many people if they don't adjust this can fix this problem sometime within the next few weeks.

What's gonna happen is or people begin to file -- tax returns in as soon as January or February of next year.

They're not gonna know what to do they're not going to be able to file returns because they could be subject to the AMT so this is one -- really have to get fixed they really need to get it fixed.

Right now what's unfortunate -- is speed you can plan a little bit around the AMT and they're not allowing people time to do that either let's talk about this fiscal cliff now we got.

A million on the table -- we got 400000 on the table do you think now that means maybe we're gonna come to some sort of compromise in -- -- yeah fifty.

Oh yeah these guys are really close to really close on the spending there really close in the taxes they're gonna player out some numbers again -- splitting the difference on a couple of them.

The real issue here is whether speaker Boehner can sell a deal that includes significant tax increases.

To his caucus in in the in the house but.

The I don't think there's really a problem Obama -- be a lot of yell and scream and but in the end Democrats are gonna do what Obama wants in the do they're gonna accept.

Relatively modest.

Increases were modest cuts in entitlement spending.

By the big issue is going to be can house Republicans -- something has to be close to a trillion dollar increase in tax revenue.

Because you and I both know let's say they come to 750 -- now this is on tap your taxable income your bottom line we're talking about raising taxes on.

Then.

It's it's a rounding error and the amount of money they will collects from these people and so we're taking money -- -- people's wallets.

-- -- for political purposes.

Wells are -- -- mean you're talking about a couple hundred billion dollars the difference between.

Raising taxes on people making 650000.

Or Bora Bora and million dollars this is real money.

So you know you it's it's not a in the -- that.

But and and in terms of the people affected it's also real money -- it can be as much as a 100000 dollars -- higher taxes.

So it's it's it's it's real money it's this isn't trivial in this big scheme of things -- -- talking about trillions and trillions of dollars and in deficit reductions not a lot.

What -- comes -- real people it matters.

If you wanna if you want to balance the budget you know you need to deal of spending any need to do with taxes the question is whose taxes go up.

You know my argument is that they're going the wrong way they ought to be raising taxes not just for people making 250 or 430.

Raising taxes for people making a 150.

And if we had time we would talk about that earned income tax credit that drives me bananas.

Howard -- thank you so much for sharing your thoughts.

Good to be --

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