Bailout Bill Includes Tax Breaks for Average Americans But Not Enough AMT Relief
A recent article on MSN talks about how The Emergency Economic Stabilization Act of 2008 includes several tax breaks that could help you. Sure, the $700 billion measure is directed at rescuing the nation’s devastated financial system, but it may also offer a little help to the average American.
Many of the provisions extend, as expected, tax breaks that had expired at the end of 2007. Others provide disaster relief, primarily to Midwesterners, and some relief from the alternative minimum tax:
AMT relief. The new law makes a few changes to the alternative minimum tax, which has its own set of rates and rules and allows fewer deductions. The most notable is a “patch” that raises the AMT exemption, which is basically a standard deduction for AMT taxpayers. For 2008, the exemptions are set at $46,200 for single people and $69,950 for married folks filing joint returns. In each case, that’s a few thousand dollars higher than the 2007 exemption, so people threatened to be pushed into AMT-land by inflation won’t be.
The new AMT patch that we’ve been hearing a lot about raises the exemption amounts to insulate most middle-income taxpayers from its reach. However, it’s only gone up a few thousand dollars, so it won’t make much of a difference. In 1977, it really only trapped about 50, and it was meant for those riches 50 of the Forbes 500 at the time to pay some kind of tax, because they were making millions of dollars. They really haven’t changed it in 30 years, and now it traps million Americans, most of them in the middle class.
As Jeff Schnepper noted in an article about tips for dealing with the tricky AMT:
Despite the increased exemptions, some 19 million taxpayers will be subject to the AMT when they prepare their 2007 returns. And more than 35 million taxpayers are projected to fall victim to this add-on tax by 2010. Whether it’s going to hit you depends on your particular tax and financial position, and on where you live.
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Tags: alternative minimum tax, AMT exemption, emergency economic stabilization act of 2008, IRS tax advice, tax breaks, tax expert, tax help
