For nearly 40 years, the Alternative Minimum Tax (AMT) impacted a relatively small number of taxpayers. However, over the last few years, more and more taxpayers have become subject to the AMT. The purpose of the AMT was to ensure that anyone who benefits from certain tax advantages pays at least a minimum amount of tax. Because the AMT was not indexed to inflation when it was enacted in 1969, many middle-income taxpayers are now finding that they are subject to the AMT.
While yearly fixes have been enacted by the government to try and shield middle-income taxpayers from the AMT, no long-term amendment of the AMT appears imminent. In 2009, the AMT exemption amounts were:
- $70,950 for a married couple filing a joint return and qualifying widows and widowers;
- $46,700 for singles and heads of household; and
- $35,475 for a married person filing separately.
As of the posting of this entry, the government has not announced what the 2010 AMT exemption will be. Without action, the 2010 AMT exemptions would be:
- $45,000 for a married couple filing a joint return and qualifying widows and widowers;
- $33,750 for singles and heads of household; and
- $22,500 for a married person filing separately.
At this time of government change, it is important to look at steps that can be taken to minimize your income tax liability prior to year-end. Call the attorneys at Kohler & Smith Co., LPA today to discuss your situation and determine what steps may be necessary to minimize your taxes.