On December 26, 2007, President Bush signed the “Tax Increase Prevention Act of 2007,” providing a one-year “patch” to the alternative minimum tax (AMT).
Without this legislation, an estimated 25 million taxpayers would have had to pay an average of $2,000 in additional taxes for 2007.
The new law increases the 2007 AMT exemption amount to $66,250 for joint filers, to $33,125 for couples filing separately, and to $44,350 for single taxpayers and heads of household. Most nonrefundable personal tax credits will be allowed to offset AMT liability.
As a result of the late passage of this law, taxpayers using five forms related to the AMT will have to wait to file tax returns until the IRS computers are reprogrammed for the changes. The five affected forms include:
* Form 8863: Education Credits
* Form 5695: Residential Energy Credits
* Form 1040A’s Schedule 2: Child and Dependent Care Expenses for Form 1040A Filers
* Form 8396: Mortgage Interest Credit
* Form 8859: District of Columbia First-Time Homebuyer Credit
The IRS has set February 11, 2008, as the expected starting date for processing returns involving these forms. Processing of other returns is expected to begin in mid-January.
I hope you find this information useful. Mike Habib, EA