AMT Relief on the Way?
May 11, 2006
The House passed a tax bill yesterday (see article here) which will extend the reduced capital gain and dividend rates, and provide some much needed AMT relief.
If you’re not familiar with AMT, it is the Alternative Minimum Tax, created to keep higher income taxpayers from paying too little income tax. Unfortunately, the AMT has never been adjusted, so many middle income taxpayers have fallen victim to the AMT in recent years.
The new tax bill will increase the AMT exemption for 2006 and will allow taxpayers to use nonrefundable personal credits (such as education credits and the childcare expense credit) to offset AMT liability.
Here are some good articles/websites to learn more about the AMT:
Fairmark.com – Guide to the Alternative Minimum Tax
SmartMoney – The Alternative Minimum Tax
IRS.gov – Tax Topic 2004-51