Alternative Minimum Tax and the "bailout bill"

One of the many special provisions included in the bailout bill passed by U.S. lawmakers last week was a "fix" for 2008 for the Alternative Minimum Tax (AMT). This tax dates back to 1970, when a small number of high-income taxpayers were paying little to no tax because of all the deductions they had. AMT was created, and essentially it takes away some deductions for these taxpayers, uses a higher-than-normal tax rate, and results in additional tax due.

When the law was first enacted, only 19,000 taxpayers paid AMT. But the numbers in the law haven't been indexed for inflation, so without a yearly fix like lawmakers just made, a lot of middle class taxpayers could be caught by AMT and would owe a couple thousand dollars in extra income taxes.

The bailout bill specifies that the AMT exemption for 2008 will be increased around $46,000 for single taxpayers, and almost $70,000 for those filing joint. That increase means fewer Americans are subject to AMT, essentially protecting the middle class for another year.


Last week I was on CNBC's On the Money, answering a viewer question about how the law will apply to her. Take a look at the video below for more details on the AMT and whether you will be affected.




Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Tax Tips for Real Estate Agents and Brokers

Most real estate agents and brokers receive income in the form of commissions from sales transactions. You're generally not considered an employee under federal tax guidelines, but rather a self-employed sole proprietor, even if you're an agent or broker working for a real estate brokerage firm. This self-employed status allows you to deduct many of the expenses you incur in your real estate sales or property management activities. Careful record keeping and knowing your eligible write-offs are key to getting all of the tax deductions you're entitled to.

Read More

Brought to you by TurboTax.com

What is the Educator Expense Tax Deduction?

The Educator Expense Tax Deduction allows teachers and certain academic administrators to deduct a portion of the costs of technology, supplies, and certain training. Here’s what teachers need to know about taking the Educator Expense Deduction on their tax returns.

Read More

Brought to you by TurboTax.com

Self-Employed Less Than a Year? How to Do Your Taxes

Have you been self-employed less than a year? If you’re just starting out, it’s possible you worked at a job earlier in the tax year before making the switch to self-employment, or you’re working multiple jobs. In this case, you may have more than once source of income you’ll need to report on your income tax return.

Read More

Brought to you by TurboTax.com

Taxes for Grads: Do Scholarships Count as Taxable Income?

Heading off to college to broaden your horizons is exciting, but funding your education via scholarships? That's even better. Scholarships often provide a path to education that might not be feasible otherwise, which is why the Internal Revenue Service (IRS) can be generous in minimizing students' tax obligations. But sometimes scholarship money does count as income, and it’s better to find out now if your scholarship adds to your tax liability than to have a surprise later. Here’s how to decode your scholarship taxation.

Read More

Brought to you by TurboTax.com
Read Full Story
Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.