The AMT for 2007

The tax professional community has awaited the action of Congress to forestall the impact of the AMT on 2007 taxes. Yesterday Congress passed and the President has indicated he plans to sign the bill titled the “Tax Increase Prevention Act of 2007.” The bill has two particular items of interest to AMT:

First, the tax exemption amount is changed to:

• $66,250 for Married Filing Joint taxpayers;
• $33,125 for Married Filing Separate taxpayers; and
• $44,350 for all other taxpayers.

Second, the nonrefundable personal credits that offset the AMT in 2006 will continue to offset the AMT for 2007.

This AMT “patch” stipulated that payment for such would be retroactive in 2008, during consideration of legislation that would extend three dozen popular tax provisions set to expire December 31.

Of the Congressional comments, Dennis Cardoza, House Member from California, said it best, “If George Washington had looked across the river and seen all those redcoats and turned tail, we would not have the country we have today. Sometimes you just have to do what is right.”

IR-2007-202

The Internal Revenue Service announced it will immediately begin the final reprogramming steps for its income-tax processing systems to prepare for the upcoming tax season following the final passage of the Alternative Minimum Tax “patch”.

“Our people will do everything they can to quickly update our systems for this major change and make this filing season as smooth as possible for everyone,” said Linda Stiff, IRS Acting Commissioner. “Our goal is to process tax returns accurately and to issue refunds to taxpayers as quickly as possible.”

The AMT and AMT-related tax calculations affect a number of core IRS processing systems that will need to be updated. The IRS is continuing to aggressively explore options for the 2008 filing season in order to minimize the impact of processing delays on taxpayers.

To help the tax professional and software communities prepare for the upcoming filing season, revised copies of the 12 tax forms impacted by the AMT legislation will be posted to irs.gov within 72 hours after the AMT patch is signed into law.

S. Raines, Sr. Financial Advisor/Tax Preparer
www.effectur.com