Fiscal Tax Blog

What Do the New AMT (Alternative Minimum Tax) Rules Mean for You?

January 04, 2008

On the day after Christmas, President Bush signed the Tax Increase Prevention Act of 2007 (H.R. 3996). This act provides a temporary one-year change to the rules for the Alternative Minimum Tax (AMT) in 2007.

This law will mean larger tax refunds for tax payers whose incomes exceed a certain threshold and claim certain tax credits. However, because these changes to the tax law were made so late in the year, the IRS will need some time to re-tool their systems and implement the new rules. This means that if you qualify to benefit from the new rules, you won't be able to file your taxes until February 11, 2008. If you don't qualify, then you'll be able to file your taxes as early as you have before.

The IRS estimates that approximately 3 to 4 million taxpayers will be impacted by the new rules.

So, will you be impacted?

In order to be impacted by the new AMT rules, first your income has to be greater than the following:

$66,250 for married individuals filing jointly
$44,350 for unmarried individuals
$33,125 for married individuals filing separately

Next you need to claim any one of the following tax credits in order to be impacted by the new AMT rules:

Hope Education Credit or Lifetime Education Credit (on form 8863)
Residential Energy Credits (on form 5695)
Mortgage Interest Credit (on form 8396)

If you meet the above criteria, the good news is that you can expect either a larger refund or a smaller tax liability than the rules allowed before the AMT patch. The downside is that the IRS will not be able to accept your return until Febraury 11, 2008.

Even if you're impacted by the new rules, you can still come into any Fiscal Tax / X-press Refunds store and get your taxes prepared before February 11. We've already studied up on the new AMT rules and will be able to prepare your taxes according to the new rules and calculate your refund as soon as you have all your tax documents (W-2's, 1099's, etc.) ready. We'll then put your return on hold and send it off to the IRS right away on February 11.

You can find out more about the new AMT patch from the National Association of Tax Preparers (NATP) here.

You can also find out more at the IRS site here.

7 Comments

Joe

January 09, 2008, 8:52pm

So is this good for me? I earn $65,000.

Fiscal Tax

January 14, 2008, 10:43am

Are you married and will you be filing a joint return with your spouse? If so, $65,000 is not high enough to be impacted by the new rules. However, your income is "on the bubble" and if it winds up being over $66,250 you could be impacted. If you will be filing a separate return from your spouse or are unmaried, then your income is definitely high enough to be impacted by the new rules.

Fiscal Tax

January 14, 2008, 10:44am

Don't forget that meeting the income criteria is not enough to be impacted by the new AMT rules. You have to ALSO be claiming one of the education, energy or mortgage credits listed above.

yari

January 15, 2008, 6:18pm

will I be able to file early and then ammend my school credit or would that cause any problems

Fiscal Tax

February 05, 2008, 1:46pm

Yari, we don't recommend that course of action. When you sign your tax return, you're declaring under penalty of perjury that they are true, correct and complete.

linda

March 28, 2009, 7:41pm

I read that if you were caught in the AMT previous years, you can be refunded 50% tax paid before 2006. Is this true? Where do I find more info on this?

Fiscal Tax

April 02, 2009, 10:58am

Linda, The rules for the AMT credit are very restrictive. The credit is allowed only when the AMT was caused by deferral items (e.g. depreciation). The nonrefundable credit is figured on Form 8801. The form and instructions may be downloaded from the IRS website (www.irs.gov).

Fiscal Tax Blog

7 Comments

Leave your comment