Alternative Minimum Tax…Deferring Tax Preference Items
The U.S. Senate just voted on a resolution that would save approximately 12 million people an average of $2000 each. The AMT (Alternative Minimum Tax) rules have been in force for years and were intended to ensure that those in higher tax brackets did not receive undue benefit from certain “tax preference” items. As a result of the lack of indexing of preference items of the AMT calculations, it is estimated that some 25 million people would be hit by the tax without the pending legislation being passed. The Senate proposal is a one-year fix and does not address how additional funds would be generated. The House, who consistently strives to pass legislation that is revenue neutral, (i.e. cuts of government revenue dollars must be offset by increases in other areas) is expected to see the Senate version soon. Our best advice today is to write your Congressmen ASAP. Your 2007 tax bill depends on it.
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