48 THE QUEENS COURIER • QUEENS BUSINESS • JUNE 14, 2018 FOR BREAKING NEWS VISIT WWW.QNS.COM
Individual AMT
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Astoria, NY 11103
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Co-Author of the
best selling book
“Breaking the Tax Code”
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Salvatore P. Candela, EA, ATA, ABA
Enrolled Agent - Tax Advisor
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BY JOHN SAVIGNANO, CPA
Congress didn’t repeal the individual
AMT in the new tax law, despite
GOP promises to do so.
But this oft-lamented tax has been
defanged… Albeit temporarily. Relief
expires after 2025. Unless extended
by this Congress or another, the AMT
will revert automatically to the rules
in effect for 2017. President Trump
and other key Republican lawmakers
want to make permanent all the
individual tax changes in the law, but
we don’t see that happening this year.
Far fewer taxpayers will pay the
AMT. An estimated 200,000 or so filers
will owe the tax when they submit
their 2018 returns, as compared
with about 5 million taxpayers if
the tax legislation hadn’t been enacted.
IRS says it will retire its AMT
Assistant online tool in expectation
of dwindling users.
AMT is owed to the extent it
exceeds your regular tax liability.
It has two rates: 26% on the first
$191,100 of alternative minimum
taxable income (AMTI)… $95,550
for married individuals who opt to
file separate returns… and then 28%.
These income figures apply for 2018
returns and are indexed each year for
inflation.
Standard deductions aren’t allowed
in computing AMTI. If you itemize,
you must add back state and local
taxes. Under rules in place for pre-
2018 years, you also had to add back
personal exemptions, interest on
home equity indebtedness not used
to buy or improve your home, and
most miscellaneous itemized deductions
taken on schedule A. The new
law eliminated or pared back many
of these write-offs.
For AMT purposes, incentive stock
options are taxed when exercised,
and interest received from private
activity municipal bonds is subject to
the AMT. AMT depreciation is slower,
with write-offs stretched over longer
periods. Many Intangible drilling
costs can wind up being added back
to income. Some personal credits are
allowed against the AMT, including
the child credit, the adoption credit,
the American Opportunity credit
and the dependent care credit.
The new law raised the AMT
exemption amounts that are deducted
when calculating AMTI. The
exemptions for 2018 are $109,400
for joint return filers, $70,300 for
singles and household heads, and
$54,700 for marrieds filing separately.
These figures are higher than the
2017 amounts of $84,500, $54,300
and $42,250.
The phaseout zones for the exemptions
start at much higher income levels…
over $1 million for couples and
$500,000 for everyone else. Compare
these numbers with the $160,900 and
$120,700 phaseout zones that applied
for 2017 returns. Because of the dramatic
increases in the exemption
amounts and phaseout zones, many
more upper-incomers will now be able
to get the benefit of the exemptions.
According to the nonpartisan Joint
Committee on Taxation, the higher
AMT exemptions and phaseout zones
will reduce federal revenues by $637
billion over the next 10 years.
John Savignano is a partner with
Savignano Accountants & Advisors
located at 47-46 Vernon Blvd., Second
Floor, in Long Island City. If you have
any questions or require additional
information, please call John at 718-
707-0955.
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