The IRS posted on its website yesterday a complete breakdown of the changes in the Alternative Mininmum Tax for tax years 2008 and 2009.
I have republished it here in its entirety:
2008 Changes
The following changes to the AMT went into effect for 2008. For more information, see Form 6251, Alternative Minimum Tax –Individuals, and its instructions.
AMT exemption amount increased. The AMT exemption amount has increased to $46,200 ($69,950 if married filing jointly or qualifying widow(er); $34,975 if married filing separately
AMT exemption amount for a child. The AMT exemption amount is now limited for certain children under age 24. (Before 2008, the limit applied to children under 18.) The minimum exemption amount for a child has increased to $6,400.
Certain credits still allowed against the AMT.The special rule that allows the credit for child and dependent care expenses, credit for the elderly or the disabled, education credits, residential energy efficient property credit, mortgage interest credit, and the District of Columbia first-time homebuyer credit to be applied against the AMT was scheduled to expire at the end of 2007. However, Congress has extended this special rule through 2008, so those credits can be applied against the AMT for 2008.
Tax-exempt interest on certain housing bonds exempt from AMT. Tax-exempt interest on the following bonds is not an item of tax preference and therefore is not subject to the AMT if the bonds were issued after July 30, 2008.
This treatment also applies to interest on any refunding bond if the bond being refunded (or, in the case of a series of refunded bonds, the original bond) is one of the bonds listed above issued after July 30, 2008.
Special depreciation allowance for qualified disaster assistance property allowed against AMT. No AMT adjustment is required for depreciation of qualified disaster assistance property that is eligible for the special depreciation allowance.
Qualified disaster loss. The 90% limit on the alternative tax net operating loss deduction (ATNOLD) does not apply to the portion of an ATNOLD attributable to qualified disaster losses.
Increase in standard deduction for net disaster loss allowed for AMT. If you claimed the standard deduction for the regular tax and it includes a net disaster loss attributable to a federally declared disaster, that net disaster loss is also allowable as a deduction for the AMT.
Kansas disaster area. The following benefits for the Kansas disaster area apply to the AMT.
Midwestern disaster areas. The following benefits for the Midwestern disaster areas apply to the AMT.
- The exemption amount on Form 8914 that is allowable for the regular tax if you provided housing for a person displaced by the Midwestern severe storms, tornadoes, and flooding is also allowable for the AMT.
- The interest on qualified Midwestern disaster area bonds is not a tax preference item. Do not include it on Form 6251, line 12.
- The 90% limit on the alternative tax net operating loss deduction (ATNOLD) does not apply to the portion of an ATNOLD attributable to qualified disaster recovery assistance losses.
2009 Changes
The following changes to the AMT went into effect for 2009.
AMT exemption amount increased. The AMT exemption amount has increased to $46,700 ($70,950 if married filing jointly or qualifying widow(er); $35,475 if married filing separately).
AMT exemption amount for a child increased. The AMT exemption amount for a child whose unearned income is taxed at the parent’s tax rate has increased to $6,700.
Certain credits still allowed against AMT.The special rule that allows the credit for child and dependent care expenses, credit for the elderly or the disabled, education credits, mortgage interest credit, and the District of Columbia first-time homebuyer credit to be applied against the AMT was scheduled to expire at the end of 2008. However, Congress has extended the special rule through 2009, so those credits can be applied against the AMT for 2009. This special rule is also expanded to include the personal use part of the alternative motor vehicle credit. It also applies to the nonbusiness energy property credit.
Qualified motor vehicle tax allowed against AMT. If you claim the standard deduction for the regular tax and it includes any state or local sales or excise tax on the purchase of a qualified motor vehicle, that tax is also allowed as a deduction for the AMT.
Tax-exempt interest on specified private activity bonds issued in 2009 or 2010 exempt from AMT.Tax-exempt interest on specified private activity bonds issued in 2009 or 2010 is not an item of tax preference and therefore is not subject to the AMT. A refunding bond is treated as issued on the date of the issuance of the refunded bond (or, in the case of a series of refundings, the original bond). However, tax-exempt interest on a specified private activity bond issued in 2009 or 2010 to currently refund a private activity bond issued after 2003 and before 2009 is not an item of tax preference.
(Kudos: Paul Caron, TaxProf Blog)
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1 response so far ↓
1 Joy Whaley // Nov 28, 2009 at 9:19 am
I’m a college student that has to post for a school project… so here goes!
Miscellaneous itemized deductions which are subject to the 2% of adjusted gross income floor are not allowed as part of the AMT calculation. In fact, these deductions are added back as a positive AMT adjustment in the amount of the regular income tax deduction. Tax preparation fees are included in miscellaneous itemized deductions. Thus, in the example above, it does make more sense to defer the expense into the next year, provided that AMT will not be a factor for the next year and the fees exceed the 2% threshold.
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