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Alternative Minimum Tax

posted: 332 DAYS 7 HOURS AGO
filed under: Tax Basics, Tax Advice, AMT
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The Alternative Minimum Tax (AMT) was passed in 1969 to ensure that upper-income taxpayers paid at least some income taxes. Up to that point, taxpayers skilled at finding enough in itemized deductions, income exclusions and tax credits would sometimes manage to avoid paying any income taxes.
The AMT is not without its critics, however. Most notably, critics argue that income limits subject to the AMT have never been indexed to inflation. (In comparison, the IRS regularly adjusts the range of incomes that fall within regular income tax brackets to adjust for inflation.)
This lack of indexing, combined with the growth in incomes over the past 30 years, has resulted in many more taxpayers paying the AMT. Without the "AMT patch" passed by Congress in October 2008, about 22.7 million Americans would have paid the AMT in 2008, according to the Tax Policy Center. With the patch, the number is still around four million taxpayers. These numbers are expected to grow higher. In the 2004 Annual Report to Congress, the Taxpayer Advocate called the AMT the most serious problem encountered by taxpayers and projected that 34.8 million individual taxpayers will have to pay the AMT in 2010.
When you complete an individual income tax return such as IRS Form 1040), you will have to complete a worksheet to determine whether you may owe the Alternative Minimum Tax. If you do owe, you must complete Form 6251.
The tax rate for the AMT is 26% of the first $175,000 of ordinary income that exceeds a certain exempt amount of income, shown below. The income that exceeds the exemption amount is called Alternative Minimum Tax Income. The tax rate increases to 28% for higher incomes. (For married taxpayers that file a separate return, the cutoff amount of income between the tax rates is $87,500.)
For 2008, the exemption for married taxpayers filing jointly is $69,950. For single taxpayers and heads of household, the exemption is $46,200. For married taxpayers filing a separate return, the exemption is $34,975. These numbers are not indexed for inflation, but are the result of a last-minute "AMT patch."
The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 liberalizes the use of the child tax credit and AMT by allowing AMT taxpayers to exclude the amount of the tax credit from their income.
For additional information on the Alternative Minimum Tax, see Tax Topic 556 at the IRS Web site (www.irs.gov).
Next, we take a look at the role your employer plays in withholding your federal income (FIT) and payroll (FICA) taxes
2008-06-09 15:27:08
COMMENTS ( 4 )
Page 1 of 1 1
itrademax
12:11AM Nov 24 2009 
Neutral Trend Inc. today announces TradeMax 2.0, a full featured tax software specifically designed for active investors or traders who have multiple accounts to manage their trade data, maximize their gain/loss strategy, prepare their Schedule D.
(www.itrademax.com)

TradeMax debuts innovative new tools that enable active investors or traders to effortlessly manage all their trades across various accounts.With customizable Vista? style
REPLY RATING
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itrademax
12:11AM Nov 24 2009 
Neutral Trend Inc. today announces TradeMax 2.0, a full featured tax software specifically designed for active investors or traders who have multiple accounts to manage their trade data, maximize their gain/loss strategy, prepare their Schedule D.
(www.itrademax.com)

TradeMax debuts innovative new tools that enable active investors or traders to effortlessly manage all their trades across various accounts.With customizable Vista? style
REPLY RATING
(0 RATINGS)
 
askhopesuc
This comment has been deleted.
Abcdferris
12:25PM Jul 22 2009 
After 50 years I decided to retire and sell my home. I got hit with AMT.
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