American Taxpayer Relief Act of 2012 Update

Just in time to replace the expired 2011 “patch” for the Alternative Minimum Tax (“AMT”) the American Taxpayer Relief Act of 2012 (“ATRA”) permanently extends AMT relief while retroactively increasing the AMT exemption for 2012.

The ATRA increases the AMT exemption for 2012 for unmarried individuals to $50,600; for married taxpayers filing jointly and surviving spouses to $78,750; and for married taxpayers filing separately to $39,375.  The 2013 AMT exemption is projected to be $80,750 for married taxpayers filing jointly and qualified widow(er)s, $51,900 for single and head of household taxpayers, and $40,375 for married taxpayers filing separately.  This is based upon an annual inflation adjustment to the exemption for years beginning after 2012.  Additional relief is provided for AMT by allowing non-refundable personal credits to the full amount of the individual’s regular tax and AMT to be used to offset AMT liability.

Acting Internal Revenue Service (“IRS”) Commissioner, Steven Miller, estimated that between 80 to 100 million taxpayers would have experienced a delay in filing their 2012 tax returns if Congress had failed to enact an AMT patch before the end of the year 2012.  The AMT relief is expected to save over 60 million taxpayers from being subject to AMT for the 2012 tax year according to the IRS.

Department of Treasury Circular 230 requires that we notify you that (i) any statement contained in this memorandum or any accompanying document relating to any Federal tax transaction or matter was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer and (ii) such statement may not be used by any person to support the promotion or marketing of or to recommend any Federal tax transaction(s) or matter(s).