May 6th, 2009 |  Print This Post |  Email This Post

The IRS has put on its web site a summary of changes made to the Alternative Minimum Tax for 2008 and for 2009. While the 2008 information isn’t of much interest to those who already have filed their 2008 tax returns, it is worth noting the changes taking effect in the current year.

The 2009 changes are:

AMT exemption amount increased. The AMT exemption amount has increased to $46,700 (single); $70,950 (married filing jointly); $35,475 (married filing separately). In 2008 these amounts were $46,200, $69,950, and $34,975, respectively.

Qualified motor vehicle tax allowed against AMT. If you claim the standard deduction for the regular tax and it includes any state or local sales or excise tax on the purchase of a qualified motor vehicle, that tax is also allowed as a deduction for the AMT.

Tax-exempt interest on specified private activity bonds issued in 2009 or 2010 exempt from AMT. Tax-exempt interest on specified private activity bonds issued in 2009 or 2010 is not an item of tax preference and therefore is not subject to the AMT. A refunding bond is treated as issued on the date of the issuance of the refunded bond (or, in the case of a series of refundings, the original bond). However, tax-exempt interest on a specified private activity bond issued in 2009 or 2010 to currently refund a private activity bond issued after 2003 and before 2009 is not an item of tax preference.

Certain credits still allowed against AMT. The special rule that allows the credit for child and dependent care expenses, credit for the elderly or the disabled, education credits, mortgage interest credit, and the District of Columbia first-time homebuyer credit to be applied against the AMT was scheduled to expire at the end of 2008. However, Congress has extended the special rule through 2009, so those credits can be applied against the AMT for 2009. This special rule is also expanded to include the personal use part of the alternative motor vehicle credit. It also applies to the nonbusiness energy property credit.

AMT exemption amount for a child increased. The AMT exemption amount for a child whose unearned income is taxed at the parent’s tax rate has increased to $6,700.

As we closer to the end of the year, we will begin watching for changes effective for 2010.