Tax planners have been eagerly awaiting a Congressional plan to deal with the Alternative Minimum Tax (AMT) and a few days ago one arrived. In a November 9th letter to the IRS Commissioner, a bipartisan group of legislators indicated their plan to work on AMT relief.
To calculate AMT an individual takes their taxable income, adjusts it based on a few factors, subtracts an exemption amount (this starts to phase out at higher income levels) and this taxable income is then subject to an AMT of 26% or 28%. In 2009 the exemption amounts were $46,700 for unmarried individuals and $70,950 for married couples filing joint returns.
In 2010, however, the exemption is currently slated to revert to 2000 levels, $33,750 for unmarried individuals and $45,000 for married couples filing jointly. This could cause some tax payers to have over $10,000 of new taxes. The letter, however, indicates that Congress plans to increase the exemption amounts to $47,450 for individuals and $72,450 for married taxpayers.
For more information on the Alternative Minimum Tax or for other tax issues or tax law concerns, contact the Chicago tax attorneys at Horowitz & Weinstein.