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What Is Alternative Minimum Tax?

If you make more than $37,225 you could be hit by the Alternative Minimum Tax

The Alternative Minimum Tax (AMT) is a parallel system of income tax that makes sure wealthy taxpayers pay at least a minimum amount of tax, primarily by limiting the benefits available from deductions.

You could get hit by the AMT if an adjusted calculation of your taxable income lies beyond a certain threshold, called an exemption. If your income is above the exemption, you must pay either the normal income tax or the Alternative Minimum Tax, whichever is greater.

For 2011 taxes, the AMT exemption levels are $48,450 for single filers and heads of household, $74,450 for married couples filing jointly, and $37,225 for married taxpayers filing separately.

For the early birds already looking ahead to next year, the AMT exemption levels for 2012 taxes are $33,750, $45,000, and $22,500 respectively. Continue reading “What Is Alternative Minimum Tax?”

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2011 Tax Filing: What To Look For This Year

The 2011 tax season is set to begin! The RapidTax team comes together to wish you an excellent 2012 and a worry-free season. We welcome you and look forward to making your online tax filing this year as effortless as possible.
File your tax return now, and get a smooth start to the tax season!

We want you to be confident that RapidTax will net you the maximum refund you are eligible for in the shortest time. To this effect, our software has been updated to reflect the very latest IRS changes for 2011.

These include but are not limited to:

  • Changes in the way capital gains and losses as well as foreign financial assets are reported.
  • Changes to how the self-employed health insurance deduction is claimed, and
  • Increases in the exemption amounts for the Alternative Minimum Tax (AMT).

2011 thankfully saw few major changes to the tax code, unlike the years that preceded it. Here are those you should make a note of as you get set to file your 2011 taxes:

  • First, the traditional April 15th deadline is once again moved forward. Because the 15th falls on a Sunday in 2012, and April 16th is the District of Columbia’s Emancipation Day holiday, the last day to file your 2011 taxes this year is April 17th. So everyone gets an extra two days to file.
  • Exemption levels for the Alternative Minimum Tax (AMT) are increased, rising to $48,450 for single filers, $74,450 for married couples filing jointly, and $37,225 for married individuals filing separately. For 2011 only those with incomes above these thresholds need worry about the AMT.
  • The First-time Homebuyer credit will only be available to members of the uniformed services, Foreign Service, or intelligence community who were on a qualified official extended duty for at least 90 days outside the U.S. between December 31, 2008 and May 1, 2010.
  • If you converted or rolled over an amount to a Roth IRA in 2010 and did not report the total taxable amount on your 2010 return, you must report half of it on your 2011 return and the other half on your 2012 return. The same applies to amounts rolled over from a 401(k) or 403(b) plan to a designated Roth account.
  • For Health Savings Accounts (HSAs) and Archer MSAs, the additional tax on distributions not used for qualified medical expenses is increased to 20% for distributions made after 2010.
  • The Making Work Pay credit, as well as most provisions of the Alternative Motor Vehicle credit are eliminated for 2011.