Congressional leaders on both sides of the aisle have indicated they will pass legislation to prevent sudden changes in the Alternative Minimum Tax (AMT). The American Recovery and Reinvestment Act of 2009 increased the AMT exemption amount but if no new legislation is passed, 2010 AMT rates will revert to 2000 levels. In a letter to the IRS Commissioner, several lawmakers assured they were working on AMT relief.
The AMT was originally created the curb the issue of taxpayers using various tax shelters and deductions to practically eliminate their income taxes. Taxpayers pay AMT if it exceeds their regular income taxes. AMT is assessed at a flat rate of 26 or 28% for individuals of all income above a certain exemption, not including applicable deductions.
In 2009 the exemption level was $46,700 for unmarried individuals and $70,950 for married couples filing joint returns. The 2010 exemptions are currently slated to be much lower, $33,750 for unmarried individuals and $45,000 for married couples filing jointly. The letter to the IRS Commissioner indicated the exemptions will be raised to $47,450 for individuals and $72,450 for married taxpayers.
For more information on the Alternative Minimum Tax or for other tax planning or tax law concerns, contact the Illinois tax lawyers at Horowitz & Weinstein.