07/ 25/ 2007
The Alternative Minimum Tax is a provision in the federal tax code that is fast becoming an issue for small-business owners. It requires taxpayers to calculate their taxes twice, and then pay the larger amount. Originally designed to ensure that wealthy Americans pay a reasonable level of tax, because of the effects of inflation and individual rate cuts, the AMT is now reaching the middle class.
Officials estimate that the number of taxpayers subject to the AMT will increase from about 1.8 million in 2001 to more than 41 million by 2013. Households with income of less than $100,000 will account for 52 percent of AMT taxpayers in 2010. As time goes on, the problem will only become more expensive and difficult to fix.
The U.S. House leadership has declared a permanent AMT fix a priority. The Ways and Means Committee is reported to be working on a bill to shift more of the AMT to higher-income households. However, no proposal has been announced. The threshold of "higher-income household" is obviously the significant detail here.
Lawmakers have mentioned a possible markup for July, and we'll be watching this legislation closely.
