In a letter sent to IRS Commissioner Doug Schulman by the leadership of the tax-writing committees of both houses of Congress, these individuals have revealed their specific plans for the Alternative Minimum Tax patch for 2010. This November 9 letter was written in response to a November 5 letter sent to them by Commissioner Schulman in which he warned them of delays in the 2011 filing season (processing of 2010 tax returns) if action is not taken soon. This Congressional letter allows taxpayers affected by the AMT to start thinking about how they will be impacted by this year’s patch, and what planning they might do before December 31 to reduce their AMT burden.
The letter was sent by the current chairs and ranking minority members of both the Senate Finance Committee and the House Ways and Means Committee. This includes Senate Finance Chairman Max Baucus (D-Mont.), House Ways and Means Chairman Sander Levin (D-Mich.), Senate Finance Ranking Member Chuck Grassley (R-Iowa) and House Ways and Means Ranking Member Dave Camp (R-Mich.).
The key part of the letter reads that legislation will allow the personal credits against the AMT and the exemption amounts to be set at $47,450 for individuals and $72,450 for married taxpayers filing jointly.
This commitment to act certainly is very good news, and it’s even a bit surprising because the proposed exemption levels appear to be higher than what is necessary to adjust the numbers for inflation. Specifically, the 2009 exemption levels were $46,700 for individuals and $70,950 for married couples filing jointly (also see http://www.amtindividual.com/amt-tax-rates.html for the phase-out levels of the exemption amounts), so these proposed numbers are 1.6 percent and 2.1 percent higher, respectively. This compares with the .2 percent Consumer Price Index (CPI) data that was released by the Bureau of Labor Statistics (BLS) and used by the IRS in calculating the increase in 2010 tax parameters over their 2009 equivalent amounts – examples are the standard deduction, personal exemptions and the tax rate schedules.
In any event, we now have a Congressional commitment to act, and proposed exemption levels that seem on the generous side. While the IRS is not yet able to change its Form 6251 based solely on this letter, stay tuned. We will be issuing a special alert as soon as these changes to the tax law are officially acted upon.
