NEW ALTERNATIVE MINIMUM TAX PATCH GOES INTO EFFECT
As promised by Congress, the 2007 Tax Increase Prevention Act (the "Act") increased the AMT exemptions amounts for 2007 for individuals as follows:
- $66,250 in the case of a joint return or a surviving spouse (up from $62,550 for 2006);
- $44,350 in the case of a single individual who is not a surviving spouse (up from $42,500 for 2006); and
- $33,125 in the case of a married individual who files a separate return (up from $31,275 for 2006).
The Act did not change the AMT phase-out rules, which subjects the AMT exemption to phase-out for taxpayers whose alternative minimum taxable income ("AMTI") exceeds the following amounts:
- Married individuals filing jointly and surviving spouses whose AMTI exceeds $150,000;
- Single individuals whose AMTI exceeds $112,500; and
- Married individuals filing separately whose AMTI exceeds $75,000.
The AMT exemption is phase-out by 25% of the amount of AMTI over the amounts listed above. Therefore, married individuals filing joint returns and surviving spouses will have their AMT exemption fully phased out when their AMTI exceeds $415,000. Single individuals will have their AMT exemption fully phased out when their AMTI exceeds $289,900. Married individuals who file separate returns will have their AMT exemption fully phased out when their AMTI exceeds $207,500.
The Act's increase in the AMT exemption is temporary, and applies only to the 2007 tax year. Absent future changes in the law, the AMT exemption amounts for individuals for 2008 will revert to the levels they were at prior to 2006. The pre-2006 levels were $45,000 in the case of a joint return or surviving spouse, $33,750 in the case of a single individual, and $22,500 in the case of a married individual who files a separate return.
