President Bush signed a one-year extension of the alternative minimum tax (AMT) patch on December 26, giving millions of taxpayers something to celebrate in the new year: relief from the AMT.
Without the extension, an estimated 25 million taxpayers would have faced an average of $2,000 more in their 2007 taxes, according to a statement from The White House.
Although the AMT was originally geared toward a small number of high-income taxpayers, some middle-income taxpayers are now subject to the tax.
Under the Tax Increase Prevention Act of 2007 (P.L. 110-166), the 2007 AMT exemption amounts were increased to $66,250 for married couples filing jointly (up from $62,550 in 2006), $33,125 for an individual filing separately (compared to $31,275), and $44,350 for single taxpayers and heads of households (up from $42,500).
If the new AMT patch had not been enacted, the exemption amounts would have reverted to $45,000, $22,500 and $33,750, respectively, according to the IRS.
The new legislation also includes a provision allowing taxpayers to continue using certain personal tax credits (e.g., the dependent care, Hope and lifetime learning credits) to offset the AMT.
Filing Delay Announced
As expected, the late enactment of the …