Gift from Congress comes with a lump of coal
Posted
Dec 27 2007, 03:47 PM
by
Karen Datko
Rating:
Dan at Money Myths congratulates Congress for sparing 21 million Americans from having to begin paying the dreaded alternative minimum tax -- or so-called "awfully mean tax" -- but asks: Why did this take so long? By waiting until six days before Christmas to act, Congress made life difficult for the IRS. If you've been used to filing your taxes in January and getting a refund, you may have to wait an extra month before the IRS can begin processing tax returns. And that, Dan calculates, can cause some pain.
The IRS estimates that 13.3 million refunds, for a total of $39 billion, would have gone out to January filers. Dan presents the example of Jan, who planned to use her $2,500 refund to pay off credit card debt that's now extra hefty with holiday spending, but will have to delay that payment. "At an average credit card interest rate of 13.42%, she's now paying $27.96 for Congress' procrastination," Dan writes. If Jan's card penalizes her for poor credit habits with a 30% rate, she'll pay an extra $62.50. For Jan and people like her, Dan writes, "Congress, thanks for making it a little harder to get out of debt."
