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January 2008
Alternative Minimum Tax Relief Extended for 2007
On December 26, 2007, President Bush signed the Tax Increase Prevention Act of 2007 (“The Act”) into law, extending an Alternative Minimum Tax (“AMT”) patch for one year. The purpose of this patch is to reduce the impact of the AMT on millions of individual taxpayers.
The Act increases the AMT exemption amount for 2007 to $66,250 for joint filers, $33,125 for couples filing separately, and $44,350 for single taxpayers and heads of household. The Act also allows the use of most nonrefundable personal credits to offset AMT liability. These include the dependent care, HOPE and Lifetime Learning Education credits, and the District of Columbia first-time homebuyer’s credit.
Without this legislation, the Treasury and the IRS predicted that as many as 25 million taxpayers would face, on average, a $2,000 tax increase in 2007.
This legislation affects numerous computations and many forms for most individual taxpayers, even those taxpayers not subject to AMT. As a consequence, the IRS has set February 11, 2008 as the anticipated starting date for processing returns that include the following forms, most of which were quickly revised following passage of The Act:
- Form 6251, Alternative Minimum Tax
- Form 1040, Schedule R – Credit for Elderly or Disabled
- Form 1040-A, Schedule 2 – Child and Dependent Care Credit
- Form 1116, Foreign Tax Credit
- Form 2441, Child and Dependent Care Tax Credit
- Form 5695, Residential Energy Credits
- Form 8396, Mortgage Interest Credit
- Form 8839, Qualified Adoption Expenses
- Form 8859, District of Columbia First-Time Homebuyer Credit
- Form 8863, Education Expenses
- Form 8880, Credit for Qualified Retirement Savings Contributions
Don’t hesitate to contact the tax specialists at Cherry, Bekaert & Holland today if you should have any questions about the effect this new legislation may have on your 2007 tax return.
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As the Southeast’s accounting and consulting Firm of Choice, Cherry, Bekaert & Holland, L.L.P. (CB&H) is uniquely positioned to provide quality, cost-effective and value-added services to a diverse and successful client base. The Firm sets itself apart by delivering the extensive industry specialization and service opportunities of a national firm, but with the accessibility, service continuity and level of personal relationship expected from a local business. Ranked nationally among CPA firms, CB&H’s resource network stretches regionally across six states, including the large metro markets of Atlanta, Charlotte, Hampton Roads, Raleigh, Richmond, Tampa and Washington D.C., and nationally and internationally through an alliance with Baker Tilly International, a worldwide network of independent accounting firms. |
