When it comes to tax laws, it is very important that you remain up to date on all changes and modifications. If left unchecked, you could end up owing the Internal Revenue Service more than you thought by simply overlooking a recent update.
In 2011, the IRS reworked what is known as the Alternative Minimum Tax. These rules were established so that anyone who has certain tax advantages must meet the required minimum tax. Thus, if your regular tax falls below the minimum calculation for your income you must pay an alternative tax to make up the difference. Here are six facts to help better communicate the rules and changes about the AMT:
- You must understand that the purpose of tax laws is to provide benefits for specified incomes, and to allow deductions or the production of credits to accommodate specified expenses. Because of these preliminary rules, some taxpayer’s financial obligations were being drastically reduced by multiple claims. So, in order to counter act this exploitation used amongst higher taxpayers, Congress created the Alternative Minimum Tax in 1969.
- Middle-income taxpayers are discovering at an increasing rate that they are subject to the AMT because it was not indexed to accommodate inflation.
- If your taxable income, plus applicable preference items and adjustments, are equal to more than the AMT exemption amount, then you may have to pay AMT.
- The law sets the AMT exemption amounts for each filing status.
- The AMT exemption amounts were raised by Congress in 2011 to the following levels:
- $74,450 for a married couple filing a joint return and qualifying widows and widowers;
- $48,450 for singles and heads of household;
- $37,225 for a married person filing separately.
- In addition, the change was made in 2011 to increase the minimum AMT exemption amount to $6,800 for children whose unearned income was taxed at their parents’ tax rate.
At Simons Accountancy, we make it a point to inform you when such changes occur in the nation’s tax laws. Our systems are always up to date with current calculations and information regarding tax laws and changes, and we always makes sure that they are reflected in your tax return.
For more information about the Alternative Minimum Tax, feel free to give us a call to determine whether or not you are eligible for—or affected by—AMT.
Dreading the quickly approaching date of April 15th? Let Simons Accountancy take care of you and ease your fears! Call (714) 637-4552 for an appointment before you miss the date. Please note: We will not be scheduling any appointments after next week, so if you need a tax return or need and extension, call now so we can fit you in before our deadline!