Alternative Minimum Tax (AMT) Relief The American Recovery and Reinvestment Act of 2009
itemed by Administrator (admin) on May 07 2009 at 11:31 AM
RockRidge Financial Blog >> The American Recovery and Reinvestment Act of 2009

 

In general terms, to find out if you owe alternative minimum tax (AMT), you start with regular taxable income, modify it with various adjustments and preferences (such as add backs for property and income tax deductions and dependency exemptions), and then subtract an exemption amount (which phases out at higher levels of income).
 
The result is multiplied by an AMT tax rate of 26% or 28% to arrive at the tentative minimum tax. You pay the AMT only if the tentative minimum tax exceeds your regular tax bill.
 
Although it was originally enacted to make sure that wealthy individuals did not escape paying taxes, the AMT has wound up ensnaring many middle-income taxpayers. Exemption amounts were scheduled to drop and fewer tax credits were to be available to offset AMT for 2009. The Recovery Act provides AMT relief for 2009 by (1) increasing the exemption amounts above last year's levels and (2) allowing nonrefundable credits to offset AMT as well as regular tax.
 

Back