04/14/2008

And my tax cut is where?

Hello:

The top question we are getting from investors at this time, is "where is my tax cut?". Some people are being affected by the Alternative Minimum Tax (AMT) and some of the increase in taxes this year is due to the large amount of capital gains paid by mutual funds this year (profits are usually considered a good thing).

Naturally, all tax questions are better answered by your tax preparer, and we refer you to him or her. However, here is some general information (from www.IRS.gov)  you may wish to understand because if you are subject to AMT, you may not benefit as much from the tax code changes of the past few years:

    What is the AMT? The AMT came into being with the Tax Reform Act of 1969. Its purpose was to target a small number of high-income taxpayers who could claim so     many deductions they owed little or no income tax. A growing number of middle-income taxpayers are discovering they are subject to the AMT.

    AMT exemption amount increased for 2007. The AMT exemption amount has increased to $44,350 ($66,250 if married filing jointly or qualifying widow(er); $33,125     if married filing separately). In 2006, the AMT exemption amount was  $42,500 ($62,550 if married filing jointly or qualifying widow(er); $31,275 if married filing separately).

    The following changes to the AMT went into effect for 2008.

    AMT exemption amount decreased. The AMT exemption amount has decreased to $33,750 ($45,000 if married filing jointly or qualifying widow(er); $22,500 if married filing separately).

Just knowing some of this information can help you be more sympathetic to your donors' tales of tax woe. Maybe, due to the decreased AMT exemption amount in 2009,  they would benefit from more charitable deductions in 2008? To your organization perhaps?

 

Terri G. Millson, CIMA, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager