The Alternative Minimum Tax (also called the “AMT”) attempts to ensure that anyone who benefits from certain tax advantages pays at least a minimum amount of tax. You should know the following seven facts about the AMT to prepare yourself for this tax season:
- Certain tax laws provide to some taxpayers many tax benefits, allowing for various types of deductions and credits for certain expenses. Such benefits can drastically reduce some taxpayers’ tax obligations. However, in its never ending quest to increase revenues, Congress created the AMT in 1969, targeting taxpayers who could claim so many deductions they owed little or no income tax.
- Because the AMT is not indexed for inflation, a growing number of middle-class taxpayers are discovering they become subject to the AMT.
- You may have to pay the AMT if your taxable income for regular tax purposes plus any adjustments and preference items that apply to you are more than the AMT exemption amount.
- The AMT exemption amounts are set by law for each filing status.
- For tax year 2009, under significant public pressure, Congress slightly raised the AMT exemption amounts to the following levels:
- $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.
- The minimum AMT exemption amount for a child whose unearned income is taxed at the parents’ tax rate has increased to $6,700 for 2009.
- If you claim a regular tax deduction on your 2009 tax return for any state or local sales or excise tax on the purchase of a new motor vehicle, that tax is also allowed as a deduction for the AMT.
Taxpayers can find more information about the Alternative Minimum Tax and how it impacts them by accessing IRS Form 6251 or using IRS’ AMT Assistant.
- AMT Assistant
- IRS Form 6251