AMT Category Archives — Tax Relief Blog Published by IRS Tax Relief — Tax Attorney — Tax Audit Representation

Emergency Economic Stabilization Act of 2008

November 11, 2008 | Mike Habib, EA

As I’m sure you’re aware, on Oct. 3, 2008, the President signed into law the Emergency Economic Stabilization Act of 2008 (P.L. 110-343). Although virtually all of the press coverage of this law has concentrated on its hotly debated $700 billion financial industry bailout plan, the legislation also contains scores of tax changes, mostly beneficial, for individuals and businesses alike.

Here’s a brief review of the tax provisions individuals need to know about right now.

AMT relief: In general terms, to find out if you owe alternative minimum tax (AMT), you start with regular taxable income, modify it with various adjustments and preferences (such as addbacks for property and income tax deductions and dependency exemptions), and then subtract an exemption amount (which phases out at higher levels of income). The result is multiplied by an AMT tax rate of 26% or 28% to arrive at the tentative minimum tax. You pay the AMT only if the tentative minimum tax exceeds your regular tax bill. Although it was originally enacted to make sure that wealthy individuals did not escape paying taxes, the AMT has wound up ensnaring many middle-income taxpayers. One reason is that many of the tax figures (such as the tax brackets, standard deductions, and personal exemptions) used to arrive at your regular tax bill are adjusted for inflation, but the tax figures used to arrive at the AMT are not.

House passes AMT relief

July 1, 2008 | Mike Habib, EA

House passes AMT relief with bipartisan majority – President threatens veto

On June 25, the House by a vote of 233 to 189 approved H.R.6275, the “Alternative Minimum Tax Relief Act of 2008.” The bill will be sent to the Senate for consideration.

The bill would patch the alternative minimum tax (AMT) problem for 2008 by extending for one year AMT relief for nonrefundable personal credits and increasing AMT exemption amounts to $69,950 for joint filers and $46,200 for individuals. The one-year AMT patch would be fully offset with a variety of revenue raising measures, including taxing certain carried interests as ordinary income, barring large integrated oil companies from claiming the Code Sec. 199 domestic production activity deduction, freezing the Code Sec. 199 deduction at the 6% level for other producers of oil and natural gas, and requiring information returns for merchant payment card reimbursements.

On June 24, in a Statement of Administration Policy, President Bush indicated that he would veto the bill because of his strong opposition to provisions raising taxes on certain partners in partnerships and taxes on payments by U.S. subsidiaries to foreign affiliates and limiting the availability of the domestic production deduction for certain oil companies.

Tax Development Q1 2008 – Economic Stimulus – Chances of being audited

April 8, 2008 | Mike Habib, EA

The most important IRS Tax Development in Q1 2008

Mike Habib, EA

myIRSTaxRelief.com

Lower interest rate could result in higher taxes

March 20, 2008 | Mike Habib, EA

How falling interest rates and the declining stock market affect tax and estate planning

Mike Habib, EA

myIRSTaxRelief.com

Mortgage Tax Debt Relief, AMT Relief

January 11, 2008 | Mike Habib, EA

Mortgage Tax Debt Relief, AMT Relief – why you need professional tax advice

AMT relief. In general terms, to find out if you owe alternative minimum tax (AMT), you start with regular taxable income, modify it with various adjustments and preferences (such as add-backs for property and income tax deductions and dependency exemptions), and then subtract an exemption amount (which phases out at higher levels of income). The result is multiplied by an AMT tax rate of 26% or 28% to arrive at the tentative minimum tax. You pay the AMT only if the tentative minimum tax exceeds your regular tax bill..

Although it was originally enacted to make sure that wealthy individuals did not escape paying taxes, the AMT has wound up ensnaring many middle-income taxpayers. One reason is that many of the tax figures (such as the tax brackets, standard deductions, and personal exemptions) used to arrive at your regular tax bill are adjusted for inflation, but the tax figures used to arrive at the AMT are not.

AMT – Alternative Minimum Tax 2007-2008

January 8, 2008 | Mike Habib, EA

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.