Wednesday, October 6, 2010

AMT Will Hit Middle Class

Here is a great report on AMT. I was speaking to a client about this yesterday and with his income of just over $150,000, he is looking at an AMT tax of an additional $9,000. Saggio Management Group can assist you in limiting your tax exposure, call today to schedule a year-end tax check-up.

By Rich Edson

FOX Business

In a ritual more common than Congressional elections, lawmakers are again considering an exemption for millions of Americans from the Alternative Minimum Tax [AMT].

Senate Finance Committee Chairman Max Baucus discussed taxes with committee Democrats last week, according to a committee aide. Baucus will “hold a bipartisan members meeting this week to discuss the committee’s agenda for the rest of the year and hear senators’ thoughts on how to handle provisions – like the AMT – that need to be addressed this year,” said the aide.

A spokesperson for the House Ways and Means Committee said only that, “Congress will patch the AMT for 2010,” though he did not provide specifics or timing.

Congress wrote the Alternative Minimum Tax in 1969 to limit deductions wealthy Americans took on their income tax. In 1970, 155 Americans paid the AMT. But Congress never accounted for inflation and over the past 40 years the tax has snagged millions of middle-class Americans each year.

Recently, Congress has patched the AMT annually, meaning it passes a one-year exemption for most of the Americans the tax would otherwise hit. Last year, Congress excluded most couples earning a combined $70,950 and less and individuals making $46,700 or less from the AMT.

Congress usually passes the AMT patch as an afterthought, though partisanship this year has slowed lawmakers’ progress on even routine measures.

If Congress fails to exclude millions of middle-class taxpayers this year, the Congressional Budget Office says the tax will take $102.2 billion from more than 27 million Americans. Of those taxpayers, nearly two thirds will make between $50,000 and $100,000 this year. Last year, with a Congressional exemption as part of the stimulus bill, 4.5 million Americans paid $33.5 billion.

Excluding those taxpayers cost the U.S. Treasury about $70 billion. Some Democrats want to exempt most middle-class taxpayers for the next decade. Estimates show a 10-year patch would cost about $660 billion.

No comments:

Post a Comment