The AMT smack-down held off for one more year

About 20 million taxpayers were spared from being hit with the Alternative Minimum Tax (AMT), thanks to a bill finally passed by the House of Representatives.

The AMT is a provision in the tax law which ensures that taxpayers with "high" income and a lot of deductions pay at least a minimum amount of taxes. But the rules were written back 1969, when the definition of "high" income was a bit different than it is today.

According to the New York Times, $150,000 in income in 1969 would be equivalent to $850,000 in today's dollars. Clearly, what was considered wealthy in 1969 is quite different by today's standards.

The tax law hasn't kept pace with inflation, and this year couples with income of $45,000 would have been affected by AMT. This new bill ups that figure to $66,250 for married taxpayers. It's estimated that this development will keep a married couple from paying an additional $4,000 to $5,000 in tax for the 2007 tax year.

Forensic accountant Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations through her company, Sequence Inc. Forensic Accounting. The Association of Certified Fraud Examiners honored Tracy as the 2007 winner of the prestigious Hubbard Award and her first book, Essentials of Corporate Fraud, will be on bookshelves in March 2008.