AMT Exemption

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AMT Exemption

The amount of a person or company's income or profit that is not subject to the alternative minimum tax. The AMT exemption gradually decreases as one's income or profit increases.
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For years since the Bush administration, Congress passed a series of one-year "patches" on AMT exemptions in order to minimize the AMT's impact on middle-class taxpayers.
The 2010 Tax Relief Act increased the AMT exemption amounts, but only for 2010 and 2011, so the AMT exemptions reverted to their statutory amounts for 2012: $45,000 for married individuals filing jointly, less 25% of alternative minimum taxable income (AMTI) exceeding $150,000; and $33,750 for unmarried individuals, less 25% of AMTI exceeding $112,500.
New AMT Exemptions for Individuals 2010 2011 Joint return $72,450 $74,450 Single return Married filing 47,450 48,450 separately 36,225 37,225
Since then, the impact of the AMT has increased partially because the AMT exemptions have not been automatically indexed annually for the effects of inflation, whereas various parameters of the ordinary income tax (such as tax brackets, exemptions, etc.
That particular offset showed up in the House's Alternative Minimum Tax Relief Act, which would raise AMT exemptions for 2008 and in the Senate's Foreclosure Prevention Act that would provide tax relief for homeowners with mortgage problems.
Other Provisions for 2007: energy tax breaks, new rules for charitable contributions and the latest on the AMT exemptions.
TIPRA Section 301 includes some relief from the AMT for 2006, via a temporary increase in the AMT exemptions, which will be $62,550 for those married filing jointly and $42,500 for single taxpayers (compared to $58,000 and $40,250, respectively, as provided in the Working Families Tax Relief Act of 2004).
Instead of really fixing the way the AMT is calculated by indexing it to inflation, Congress just extended AMT exemptions for one-year, choosing to ignore the long-term problem.
And AMT exemptions, designed to limit the burden, are not always available -- especially to joint filers.
The individual AMT exemptions for 2007 are $66,250 for married taxpayers, and $44,350 for single taxpayers.
AMT exemptions were initially enacted to keep the AMT limited to wealthier taxpayers, but because they were not indexed to inflation, the exemptions are now quite small in current dollars and thus now annually trap millions of taxpayers.
The ARRA increased the AMT exemptions for 2009 to $70,950 for a joint return, $46,700 for single taxpayers and heads of household and $35,475 for married taxpayers filing separately Commonly referred to as the "AMT patch," this measure comes with an estimated cost of $70 billion to provide AMT relief to an estimated 26 million taxpayers.