The alternative minimum tax (AMT) exemption amounts for individuals have been altered for the 2008 tax year.  The amounts were increased in 2007 as a one year “patch” in order to reduce the number of individuals who would otherwise be subject to the AMT and thereby minimize the “spread” of AMT liability to an increasing number of taxpayers.  The Extenders and AMT Relief Act of 2008 will keep the AMT exemption amounts from decreasing to pre-“patch” levels for one more year, and are set slightly higher than the exemption amounts for 2007. 

The new AMT exemption amounts are given below:

$69,950 (up from $66,250 in 2007) for married couples filing a joint return and surviving spouses

$46,200 (up from $44,350 in 2007) for an individual who isn’t married or a surviving spouse

 $34,975 (up from $33,125 in 2007) for married individuals filing separate returns

The AMT exemption amounts will drop back down to the pre-”patch” rates for tax years beginning in 2009, assuming no further “patches” or broader changes to the AMT generally.  These exemption amounts are given below:

$45,000 for married couples filing a joint return and surviving spouses

$33,750 for an individual who isn’t married or a surviving spouse

$22,500 for married individuals filing separate returns

The Kiddie tax AMT exemption amount has also been altered for the 2008 tax year.  For a child subject to the “kiddie tax” (certain children with unearned income over $1,800 for 2008), the AMT exemption amount can’t exceed the sum of the child’s earned income plus $6,400 in 2008.  In addition, the kiddie tax AMT exemption can’t be more than the child’s regular AMT exemption (the unmarried individual’s exemption amount given above).

Source: RIA Checkpoint