Enacted by Congress in 1969, the AMT Tax (alternative minimum tax) attempted to ensure that individuals and corporations that benefit from certain exclusions, deductions, or credits pay at least a minimum amount of tax. The problem with this law is that the writers of the legislation did not add adjustments for inflation, so each year Congress has had to make provisions to adjust the numbers.
The American Taxpayer Relief Act of 2012 finally made the adjustment for inflation a permanent part of the law.
For a joint return or a surviving spouse, the Act sets the AMT exemption amount to $78,750 for tax years beginning in 2012. For an individual who is not married and is not a surviving spouse, the Act sets the AMT exemption amount to $50,600 for tax years beginning in 2012. For married taxpayers filing separate returns, the AMT exemption amount is set at $39,375 for tax years beginning in 2012 ( 1/2 the amount of married taxpayers filing jointly). The Act, beginning in 2013, will automatically adjust these amounts for inflation.
The Act repeals the general rule limiting the aggregate amount of certain nonrefundable personal credits to the excess of the taxpayer’s regular tax over the tentative minimum tax. The Act makes permanent the AMT patch provision that allows all of the nonrefundable personal credits to be taken to the full extent of both regular tax and AMT liability. In addition, the Act removes separate limitations on certain credits so that all nonrefundable personal credits would be subject to the same limitation. Effective for taxable years beginning after December 31, 2011.
To find out how this will directly affect you, contact us at 559.924.1225