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AMT Exemption Amounts for the Tax Year 2011

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The Alternative Minimum Tax (the “AMT”) attempts to ensure that anyone who benefits from certain tax advantages pays at least a minimum amount of tax. Congress created the AMT in 1969, targeting higher-income taxpayers who could claim so many deductions they owed little or no income tax. The AMT provides an alternative set of rules for calculating your income tax. In general, these rules should determine the minimum amount of tax that someone with your income should be required to pay. If your regular tax falls below this minimum, you have to make up the difference by paying alternative minimum tax.

Unfortunately, because the AMT is not indexed for inflation, a growing number of middle-income taxpayers are discovering they are 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. Congress sets the AMT exemption amounts are by law for each filing status.

For tax year 2011, Congress raised the AMT exemption amounts 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.

Moreover, the minimum AMT exemption amount for a child whose unearned income is taxed at the parents’ tax rate has increased to $6,800 for 2011.

Contact Sherayzen Law Office for Tax Planning Advice

If you are potentially facing the AMT, contact Sherayzen Law Office for tax planning advice. Our experienced tax firm will review the facts of your case and identify the available strategies to make sure that you do not overpay federal taxes.

Will You be Subject to the AMT in the Tax Year 2012?

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The Alternative Minimum Tax (AMT) is an additional tax that certain individuals must pay on top of their regular tax liability.  When the original “minimum tax” was enacted in 1969, its purpose was to limit the ability of high-income earners from paying little or no tax by using certain tax breaks.  Tax breaks that may trigger the AMT include various itemized deductions, accelerated depreciation, and incentive stock option benefits, among others.

Unfortunately, as many taxpayers have learned in the past few decades, the AMT can hit even middle-class individuals and those who do not take many tax breaks.  This problem is further exacerbated by the effects of inflation.

What about Tax Year 2012?

Congress has generally enacted a “fix” or “patch” to prevent non-high-earners from being subject to the AMT in past years.  Unfortunately, as it currently stands, Congress has not acted yet for the tax year 2012 Since this is an election year and the government is looking for more ways to increase revenues, there is doubt as to whether the Congress will actually adopt such a “fix”.  If it does not, tens of millions of additional taxpayers may face a much higher tax bill because of the AMT.  The Congressional Budget Office (CBO) has estimated that the average tax increase for such taxpayers will be $3,900, and some may pay over $8,000 in additional taxes.

If you believe you may be one of the many people subject to the AMT for tax year 2012, you may want to consult with an experienced tax attorney in order to minimize your potential tax liability.

Contract Sherayzen Law Office for AMT Tax Planning

If you believe that you are facing the AMT in the tax year 2012, contact Sherayzen Law Office.  Our experienced tax attorneys will analyze your situation and advise you on how shield yourself from over-taxation with proper tax planning pursuant to the Internal Revenue Code provisions.