House Passes AMT Relief Without Offsetting
Tax Increases
On December 19, 2007, the House abandoned its commitment to pay-as-you-go (PAYGO)
budget rules and passed an alternative minimum tax (AMT) bill that will
provide tax relief to 23 million Americans in 2008. By a vote of 352-64, the
House passed the Tax Increase Prevention Act of 2007, which is the tax-free
version of AMT relief that the Senate approved by an 88-5 margin on December
6, 2007.
The Tax Increase Prevention Act of 2007 (AMT Relief Act) increases the
alternative minimum tax (AMT) exemption amount for tax years beginning in
2007. The AMT exemption amounts are increased to:
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$66,250 for married individuals filing a joint return and surviving spouses (up from $62,550 in 2006, and $58,000 in 2003 through 2005); and
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$44,350 for unmarried individuals other than surviving spouses (up from $42,500 in 2006, and $40,250 in 2003 through 2005).
In addition, the AMT Relief Act extends the
temporary provision that permits most nonrefundable tax credits (including
dependent care, elderly and disabled, Hope Scholarship and Lifetime
Learning, and the D.C. homebuyer credit) to offset the entire regular and
AMT liability. Although this provision was due to expire on December 31,
2006, a taxpayer subject to AMT will now be able to utilize these tax
credits on their 2007 income tax return.
These provisions of the “AMT patch” legislation serve to protect many
taxpayers from the burden of paying the alternative minimum tax, or they may
considerably reduce their tax liability in 2007. However, the computation of
the alternative minimum tax is complex and requires a careful evaluation of
your tax situation. Please contact your Somerset tax advisor or a member of
our
Health Care Team at your earliest
convenience to discuss your options and determine your eligibility.
Health Care Commentaries is
provided by Somerset’s
Health Care Team
for our clients and other interested persons upon request. Since
technical information is presented in generalized fashion, no final
conclusion on these topics should be made without further review. For
additional information on the issues discussed, please contact a member
of our Health Care Team. This
document is not intended or written to be used, and cannot be used, for
the purpose of avoiding tax penalties that may be imposed on the
taxpayer.
Somerset CPAs,
P.C.
3925 River Crossing Parkway, Third Floor
Indianapolis, Indiana 46240
317.472.2200 • 800.469.7206 • FAX 317.208.1200
http://healthcare.somersetcpas.com
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