The Alternative Minimum Tax may apply to you if your income is above a certain amount. Here are five facts the IRS wants you to know about the AMT:
1. You may have to pay the tax if your taxable income plus certain adjustments is more than the AMT exemption amount for your filing status.
2. The 2012 AMT exemption amounts for each filing status are:
3. AMT attempts to ensure that some individuals and corporations who claim certain exclusions, tax deductions and tax credits pay a minimum amount of tax.
4. You should use IRS e-file to prepare and file your tax return. You figure AMT using different rules than those you use to figure your regular income tax. IRS e-file software will determine if you owe AMT, and if you do, it will figure the tax for you.
5. If you file a paper return, use the AMT Assistant tool on IRS.gov to find out if you may need to pay the tax.
AMT can be confusing. Contact Tax On Wheels, LLC at 803 732-4288 if you need assistance determining your AMT liability.
The congress has passed and the President has signed into law The American Taxpayer relief act of 2012. This bill is over 150 pages and retroactively extends many provisions that were slated to expire The law also permanently patches the AMT (alternative minimum tax). The permanent patching of the AMT is alone worth any inconvenience we may endure this year.
The IRS is reviewing the details of the legislation and assessing the impact it will have on the tax filing season. We expect that the IRS will soon make some pronouncement regarding when taxpayers can begin filing tax returns. The tax e-filing season is scheduled to begin January 22, 2012, however, due to this last minute legislation just signed into law we anticipate that there will be some delay processing most if not all tax returns this year.
At this point many common tax forms have not been released by the IRS. We would not be surprised to find that processing for many of these forms has been delayed for a number of weeks, similar to the delays back in 2011 when late breaking legislation caused certain taxpayers to have to wait until February to file.
As a general rule, we encourage our clients to let other taxpayers be the first guinea pigs through the tax system to avoid software programming and processing issues. This year will be no different.
Tax On Wheels, LLC has installed our tax software for this year but it is not yet ready for production. We expect our tax software will be stable in another week or so, January 10, 2013. At that point we will begin taking appointments for fairly simple returns. Those with more complicated returns should probably wait until at least the end of January to schedule appointments. Remember, however, that even if we complete your appointment we may not be able to process your tax return until the IRS authorizes processing for all of the forms needed for your return.
Bottom line, expect delays this tax season.
Please feel free to contact Tax On Wheels, LLC at 803 732-4288 if you have questions or concerns about the coming tax season.
The Alternative Minimum Tax attempts to ensure that anyone who benefits from certain tax advantages pays at least a minimum amount of tax. The AMT provides an alternative set of rules for calculating your income tax. In general, these rules should determine the minimum amount of tax that someone with your income should be required to pay. If your regular tax falls below this minimum, you have to make up the difference by paying alternative minimum tax.
Here are six facts the Internal Revenue Service wants you to know about the AMT and changes for 2011.
1. Tax laws provide tax benefits for certain kinds of income and allow special deductions and credits for certain expenses. These benefits can drastically reduce some taxpayers’ tax obligations. Congress created the AMT in 1969, targeting higher-income taxpayers who could claim so many deductions they owed little or no income tax.
2. Because the AMT is not indexed for inflation, a growing number of middle-income taxpayers are discovering they are subject to the AMT.
3. You may have to pay the AMT if your taxable income for regular tax purposes, plus any adjustments and preference items that apply to you, are more than the AMT exemption amount.
4. The AMT exemption amounts are set by law for each filing status.
5. For tax year 2011, Congress raised the AMT exemption amounts to the following levels
6. The minimum AMT exemption amount for a child whose unearned income is taxed at the parents’ tax rate has increased to $6,800 for 2011.
Use the AMT Assistant on the IRS website to determine whether you may be subject to the AMT. You can find more information about the Alternative Minimum Tax and how it affects you by accessing IRS Form 6251, Alternative Minimum Tax —Individuals, and its instructions.
Please feel to contact Tax On Wheels, LLC at 803 732-4288 if we can assist you with this or any other tax issue.