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In the financial bailout package enacted in October, Congress did families a favor and extended the exemptions on the alternative minimum tax for the 2008 tax year.
The AMT is a parallel tax system that can take away some breaks and potentially saddle taxpayers with huge bills.
To reduce the number of taxpayers getting hit by the tax, Congress has expanded the income levels under which the tax cannot be applied.
For 2008, the AMT exemption will rise to:
- Married couples filing jointly: $69,950 ($34,975 for married couples filing separately). That's up from $66,250 in 2007 -- or $33,125 for married couples filing separately.
- Singles and heads of households: $46,200. That's up from $44,350 in 2007.
What happens in 2008? That depends again on Congress.
Unless Congress acts, the tax could hit 23 million taxpayers because the exemptions listed above will fall.
As in 2007, Congress also agreed to let you use a number of personal tax credits to offset your 2008 AMT bill as well as your regular tax bill. So, in 2008, this reduces the odds of being hit with the AMT. This treatment applies to these credits:
- Child tax credit (up to $1,000 per child).
- Hope Scholarship education tax credit (up to $1,800) and Lifetime Learning education tax credit (up to $2,000).
- Child and dependent care tax credit.
- Adoption tax credit.
- Retirement saver’s tax credit.
- Tax credit for energy-saving equipment installed in your residence.
- Tax credit for elderly and disabled individuals.
- Mortgage tax credit for first-time buyers.
- The District of Columbia's $5,000 first-time tax credit.
Published Dec. 10, 2008
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