Anybody feeling brushed up enough on the new AMT changes and care to share their knowledge?

The Tax Increase Prevention Act of 2007 (H.R. 3996) has been signed into law, increasing the 2007 AMT exemption amount to $66,250 for married taxpayers and $44,350 for unmarried taxpayers (up from $62,550 and $42,500 respectively in 2006). The Act also extends AMT relief to nonrefundable personal credits for 2007.

This act will prevent 19 million individual taxpayers from being subject to the AMT and reduce some of the burden on the 4.2 million who would still pay the AMT in 2007. Without the patch, the exemption would have dropped to $45,000 for married taxpayers and $33,750 for singles.
The IRS has announced that the upcoming filing season will start on time for everyone except those using the following five forms:

Form 8863, Education Credits
Form 5695, Residential Energy Credits
Form 1040A, Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers
Form 8396, Mortgage Interest Credit
Form 8859, District of Columbia First Time Homebuyer Credit

The IRS will not begin accepting these forms until February 11, 2008, affecting approximately 13.5 million taxpayers. The February date allows the IRS enough time to update and test its systems to accommodate the AMT changes without major disruptions to other operations related to the tax season. As the IRS has said previously, it will take approximately seven weeks after the AMT patch was approved to update IRS processing systems completely.

Jim Kirby, CPA/PFS, CFP, CFS

Personal credits are back.
The exemption amounts were bumped back.
Stale AMT credits from 3 or more years back can be refunded.

Go to Irs.gov.


Alternative Minimum Tax (AMT) 鈥?How It Affects Filing Season 2008



Updated Dec. 28, 2007

The upcoming tax season is expected to start on time for everyone except for certain taxpayers potentially affected by late enactment of the Alternative Minimum Tax 鈥減atch.鈥?Following extensive work in recent weeks, the IRS expects to be able to begin processing returns for the vast majority of taxpayers in mid-January. However, as many as 13.5 million taxpayers using five forms related to the Alternative Minimum Tax (AMT) legislation will have to wait to file tax returns until the IRS completes the reprogramming of its systems for the new law.

IRS has targeted Feb. 11, as the potential starting date for taxpayers to begin submitting the five-related returns affected by the legislation. The February date allows the IRS enough time to update and test its systems to accommodate the changes without major disruptions to other operations related to the tax season. See IRS News Release 2007-209 for more information.

Returns that include the following forms cannot be filed until Feb. 11, 2008:

Form 8863, Education Credits
Form 5695, Residential Energy Credits
Schedule 2, Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers
Form 8396, Mortgage Interest Credit
Form 8859, District of Columbia First-Time Homebuyer Credit
Check this page for further AMT-related updates.

Additional Information on the Alternative Minimum Tax

What is the AMT? The AMT came into being with the Tax Reform Act of 1969. Its purpose was to target a small number of high-income taxpayers who could claim so many deductions they owed little or no income tax. A growing number of middle-income taxpayers are discovering they are subject to the AMT.

Questions and Answers: AMT Legislation and Filing Season 2008
Tax Topic 556 鈥?Alternative Minimum Tax
Form 6251, Alternative Minimum Tax
1040 Central 鈥?Forms, publications, calculators and other information for the filing season

Just to add few details to the above good answers:

"The new law also extends for the 2007 tax year the ability of taxpayers to use most nonrefundable personal credits to offset their AMT liability. These include the dependent care credit, credit for interest on certain home mortgages, credit for the elderly and disabled, the Hope credit for certain college expenses, the Lifetime Learning credit and the credit for certain non-business energy property."