AMT Patched for 2010 and 2011

The 2010 Tax Relief Act patches the AMT exemption amounts for 2010 and 2011. Nearly 28 million Americans were expected to be subject to Alternative Minimum Tax this year.  This new law will allow all but 4 million taxpayers to avoid the AMT tax trap.  See our previous blogs posts for more details on the tax and its implications.

The AMT exemption amounts for 2010 are as follows:

  • Married individuals filing jointly and surviving spouses: $72,450, less 25% of AMTI exceeding $150,000 (zero exemption when AMTI is $439,800);
  • Unmarried individuals: $47,450, less 25% of AMTI exceeding $112,500 (zero exemption when AMTI is $302,300); ( Code Sec. 55(d)(1) , as amended by Act Sec. 201) and
  • Married individuals filing separately: $36,225, less 25% of AMTI exceeding $75,000 (zero exemption when AMTI is $219,900). But AMTI is increased by the lesser of $36,225 or 25% of the excess of AMTI (without the exemption reduction) over $219,900.

The AMT exemption amounts for 2011 will be as follows:

  • Married individuals filing jointly and surviving spouses: $74,450, less 25% of AMTI exceeding $150,000 (zero exemption when AMTI is $447,800);
  • Unmarried individuals: $48,450, less 25% of AMTI exceeding $112,500 (zero exemption when AMTI is $306,300) ( Code Sec. 55(d)(1) , as amended by Act Sec. 201); and
  • Married individuals filing separately: $37,225, less 25% of AMTI exceeding $75,000 (zero exemption when AMTI is $223,900). But AMTI is increased by the lesser of $37,225 or 25% of the excess of AMTI (without the exemption reduction) over $223,900.

Final note:

The 2010 Tax Relief Act does NOT fix the AMT problem. Absent future legislation (e.g., another AMT “patch”), the reduction in the AMT exemption amounts that, under pre-2010 Tax Relief Act law, was scheduled to apply to tax years beginning after 2009, will apply to tax years beginning after 2011. This means that in 2012, without further “patches,” or broader changes to the AMT generally, the AMT exemption amounts will drop to its original 1986 levels and again over 30 million taxpayers would be subject to AMT.

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