In my last post, I discussed the impact on taxpayers for 2010 if Congress failed to alter the income level at which the Alternative Minimum Tax would apply. No action on this issue was taken up by Congress prior to the election; so we have been waiting patiently to see what happens now that November 2nd has come and gone. It is estimated that 2.1 million taxpayers could be impacted (always negatively) by the AMT unless the income thresholds were increased.
Well, we finally have some good news. In a letter signed by both Democratic and Republican lawmakers addressed to the IRS, Congress is promising to once again approve a one-year correction to the AMT to avoid the potential tax carnage it could cause. The AMT is sort of like the evil alter-ego of the regular tax code. Just when you think you've paid all you should, out jumps the dreaded AMT to add a little more.
The whole problem with these thresholds is that the original legislation didn't have any sort of cost of living adjustment. But, rather than put some form of permanent cost of living adjustment going forward, Congress just pushes it down the road one year at a time. So, we will be having this same discussion a year from now I'm sure.