Eliminate 90-Percent Limitation on the Use of Foreign Tax Credits and Use of NOLs Against Alternative Minimum Tax
and Expansion of Exemption Amounts
Both the city and state have also increased income tax rates for owners without non-resident partners, which would affect an owner's federal income tax by increasing the probability of an alternative minimum tax
. An AMT is an extra tax some people have to pay on top of the regular income tax.
There's also the problem of the Alternative Minimum Tax
, a nifty device passed way back to ensure that fat cats pay their fair share of taxes.
Rules for the alternative minimum tax
have not fundamentally changed, but the rates for taxable income above $175,000 have increased to a maximum of 28 percent, the same as the capital gains rate.
Filers who pay the alternative minimum tax
are not eligible.
The alternative minimum tax
(AMT) rate applicable to individuals also increases.
The minimum tax credit is a mechanism linking the alternative minimum tax
system with the regular tax system.
Increased individual AMT exemption amounts: The alternative minimum tax
(AMT) exemption increased for 2006 to $62,550 for married couples filing jointly and surviving spouses, and to $42,500 for unmarried individuals.
Households subject to the alternative minimum tax
(AMT) pay an average of $2,770 more in taxes than other taxpayers.
Hegt said that the Alternative Minimum Tax
should be eliminated; that a more objective test needs to be implemented to determine whether workers are classified as employees or independent contractors; that objective, administrable tests relating to the capitalization, expensing and recovery of capitalized costs need to be developed; that capital gains rules need to be simplified; and that estimated tax safe harbors should be rationalized.
It's the Alternative Minimum Tax
, which is designed to keep the wealthy from using deductions to erase their tax bill.
In her annual report to Congress, Olson cites the alternative minimum tax
, the earned income tax credit and the large number of provisions designed to encourage taxpayers to save for education and retirement as key illustrations of the problems of complexity wrought by the code.