Did you know …..?
Alternative Minimum Tax (AMT), introduced by the Tax Reform Act of 1969, was initially intended to target 155 high-income households that had been eligible for so many tax benefits that they owed little or no income tax under the prevailing tax code of that time. AMT contains exemptions to prevent it from hitting middle-income taxpayers; however, those exemptions had not been indexed for inflation. So, left alone, the AMT could affect taxpayers well down the income scale. To prevent that from happening this year, a new law temporarily raises the AMT exemption amounts for 2008:
For tax-year 2008, Congress raised the alternative minimum tax exemption to the following levels:
- $69,950 for a married couple filing a joint return and qualifying widows and widowers, up from $66,250 in 2007
- $34,975 for a married person filing separately, up from $33,125 and
- $46,200 for singles and heads of household, up from $44,350
Under current law, these exemption amounts will drop significantly to $45,000, $22,500 and $33,750, respectively, in 2009 (Source: www.IRS.gov.)
