Financial Facts

March 2012


The 2003 Tax Act (Jobs and Growth Tax Relief Reconciliation Act of 2003 - JGTRRA) was signed into law in May 2003, followed more recently by the Working Families Tax Relief Act of 2004 (WFTRA), which was signed into law in October 2004, and the Tax Increase Prevention and Reconciliation Act of 2005, signed into law in May 2006.

As is typical of recent tax legislation, the 2003, 2004 and 2005 Tax Acts offered tax relief to individuals, but did so through a variety of complex provisions that included retroactive, temporary and phased-in/phased-out effective dates. While some of these provisions may not apply to you, other provisions will and you may want to revise your planning to take full benefit of those provisions.

Today's topic is alternative minimum tax relief. If you would like additional information on this topic, please call my office.

Alternative Minimum Tax Relief

The objective of the alternative minimum tax (AMT) is to ensure that taxpayers with itemized deductions and/or income from certain tax preferences will not avoid or defer all tax liability, but instead will pay a minimum tax. The AMT applies if certain tax benefits, when added back to income, result in an AMT tax that exceeds the regular income tax.

The alternative minimum tax rate is:

  • 26% on the first $175,000 ($87,500 married filing separately) of AMT income, after the AMT exemption; and
  • 28% on AMT income over $175,000 ($87,500 married filing separately).

While each taxpayer receives an AMT exemption, increasing numbers of middle-income taxpayers are being hit with the AMT, the provisions of which are not indexed for inflation.

In recent years, Congress has passed an annual "patch" that increases the AMT exemption amount, but only on a temporary basis, as was the case for 2010 and 2011. The hope is that Congress will either pass another "patch" for 2012 or will finally permanently reform the AMT.

The AMT exemption is based on filing status and is reduced by 25 cents for each $1 of income subject to AMT that exceeds specified amounts:

AMT Exemption Amount:

Filing Status 2010 2011 2012 and later(2) Reduced by 25% of AMT Income Over: Eliminated if AMT Income Exceeds:
Married filing jointly and qualifying widow(er) $72,450 $74,450 $45,000 $150,000 $330,000
Single and head of household $47,450 $48,450 $33,750 $112,500 $247,500
Married filing separately $36,225 $37,225 $22,500 $75,000 $165,000

Planning notes:

  1. Unfortunately, there are no specific tests to indicate AMT liability. If you claim itemized deductions and/or certain tax preference items, you must first figure your regular income tax and then calculate AMT. If AMT exceeds your regular tax, your tax liability is increased by the difference.
  2. Assuming Congress does not pass another AMT "patch" or permanently reform the AMT

from the Masters...


by Tom Hopkins

Make it a firm habit to sit down for a few minutes every evening to plan what you must do tomorrow. List them in the order of importance. This is the one and only system many highly successful people use.

To get yourself organized, list all the things you can do and learn to make yourself more effective. Work out a schedule that will get them done or learned in the shortest possible time.

When you start making lists the night before, your subconscious mind will work on your list all night without disturbing your sleep to help you solve your problems and achieve your goals. Your subconscious, however, can't help unless you tune it in to what's going to happen next.

Give this process several days to start flowing. Go over your list in a quiet room. See yourself involved with the most difficult part of each thing on your list. Make the sessions brief and upbeat. See yourself happily enjoying the fact that you've successfully accomplished each of your goals for tomorrow.

Don't concentrate on fear and dread of what you have to do. If you do that, your subconscious may figure out ways to make you forget or otherwise avoid meeting what is sees as painful experiences.

Brought to you by:

Jeffrey N. Schweitzer, EPA, CEP, ATP

Northeast Financial Strategies Inc

667 South Street
Wrentham, MA 02093

About our firm:

Offering Financial & Estate Planning, Investments, Insurance, Accounting, Payroll, and Income Tax Preparation for Individuals & Small Business. "Financial Strategies That Fit YOUR Needs!"

from the Masters...

On Commitment

"A commitment is like your signature on a contract: it binds you to a course of action."

-– Nido Qubein

"Choose a field you enjoy and then become totally absorbed in it."

-– Brian Tracy

"A total commitment is paramount to reaching the ultimate in performance."

-– Tom Flores

"All great masters are chiefly distinguished by the power of adding a second, a third, and perhaps a fourth step in a continuous line. Many a man had taken the first step. With every additional step you enhance immensely the value of your first."

-– Ralph Waldo Emerson

On Concentration/ Focus

"The weakest living creature, by concentrating his powers on a single object, can accomplish something; whereas the strongest, by dispersing his over many, may fail to accomplish anything."

-– Thomas Carlyle

"Give whatever you are doing and whoever you are with the gift of attention."

-– Jim Rohn

"Devote uninterrupted chunks of time to the most important people in your life."

-– Brian Tracy

"Our grand business is not to see what lies dimly at a distance, but to do what lies clearly at hand."

-- Thomas Carlyle

The purpose of this newsletter is to provide information of general interest to our clients, potential clients and other professionals. The information provided is general in nature and should not be considered complete information on any product or concept described.

For more complete information, please contact my office at the phone number above.

Published by The Virtual Assistant; 2012 VSA, LP

We don't want to add to your e-mail clutter! If you do not enjoy my newsletter, just reply to this e-mail and ask to be removed or call my office.


Facebook LinkedInTwitterBlog

Bookmark and Share