11-12-2007, 05:13 PM | #1 |
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AMT Patch passes in the House
The Bill that Sen Rengel (Dem, NY) proposed was passed by The House late last week. Step 1 out of the way.
Now to see whether the Senate passes it. It was estimated that AMT was going to bite about 25 million people in the rear at an average of about $2,500 per taxpayer, mostly people who are "borderline" waelthy, meaning not the uber-rich, but college grads who are doing well for themselves and earing a nice salary, but are no means millionaires. The proposed patch would increase the exemption for joint filers to $66,250 and for individuals, $44,350. Interestingly, Harry Reid has stated that the Senate will not pass an AMT patch before December. I guess Senators need 4 weeks off before they reconvene in mid-December and then take another 4 weeks off....
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11-12-2007, 05:16 PM | #2 |
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Is there a way of figuring out beforehand what the risk is of being hit with AMT?
I'm thinking about prepaying tithing for next year, and it would be a bummer to to be hit with the AMT as a result. |
11-12-2007, 05:20 PM | #3 | |
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Quote:
Why would you pre-pay tithing and why pre-paying it put you in AMT? One option you may want to explore is to have your employer pay you in breadfruit. The IRS doesnt tax that.
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11-17-2007, 01:46 AM | #4 |
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Hey Triplet, could you explain the other half of the bill in lemuel's terms? Isn't there a huge tax increase if you make more than $250K? Not that this would affect me, but i'm curious.
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11-17-2007, 02:16 PM | #5 |
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Mr Sparkle! by "other half of the bill," do you mean the rest of the bill, whether it pertains to AMT (because he proposed other things pertaining to C corps, credits, etc) or are you simply asking how AMT works?
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11-19-2007, 03:56 AM | #6 |
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I thought I heard, and perhaps I'm wrong, that in addition to AMT changes, there would be an increase in taxes for individuals in higher tax brackets. Like their capital gains would be taxed as ordinary income or something. Again, I might have heard wrong, is there any 'downside' to this bill?
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11-19-2007, 04:00 PM | #7 | |
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The bill has proposed offsets ("revenue raisers") to help fund the proposed AMt patch. This is standard on the Hill. You cant propose cutting a tax without raising a different one. Also, keep in mind that the AMT patch is only one of several things being proposed.....also included is another extension for fed R&D, taxation on stocks, and other corporate incentives. In the case of AMT, from a policy perspective, it would make little sense to give the public a reprieve from AMT and then raise income taxes for higher income earners....since they are the ones who are paying AMT to begin with. Thus far, some revenue raisers that have been suggested include several significant changes in the taxation of private equity investments. Foremost, the legislation would raise an estimated $25.6 billion over 10 years by requiring investment fund managers to treat income received from carried interests as compensation taxed as ordinary income and subject to payroll taxes to the extent that it does not represent a reasonable return of investment. Capital gains rates would still apply to the amount that represents a reasonable return on capital. Anyway, without boring everyone, the point I am trying to make is that revenue raisers that do not directly kill individuals will offset the AMT patch. Fun stuff.
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11-19-2007, 11:10 PM | #8 | |
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I'm auditing a VC right now, and the tax people were talking about this when I overheard it. I really need to brush up on my tax stuff, I passed the Reg portion of the CPA exam a year ago, but forgot everything. Off topic, just curious if this quote thing works as easily as it seems: |
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12-20-2007, 12:34 AM | #9 |
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After much wrangling between Dems and Reps, the AMT patch for TY 2007 has been passed. President Bush will likely sign it tomorrow or Fri.
The Reps stood firm and forced the Dems into a patch that basically had not revenue offsets. Not sure how we will pay for this patch without offsets somewhere, but at least it has been passed. Now the rub....because it has taken so long to pass the patch, it is going to take awhile for the Service to reconfigure all their software to reflect the patch. Some estimates are at 8 or 10 weeks. This means no income tax returns processed until at least early to mid February. Breathe easy....for now. The patch is only good for one year.
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12-21-2007, 03:58 PM | #10 |
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Where was the exemption before the tax passed?
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