Introducing the AMT Assistant
A new tool, developed to help taxpayers and tax preparers determine whether the taxpayer is potentially subject to the alternative minimum tax (AMT), debuted last week on the Internal Revenue Service (IRS) website. The AMT Assistant automates the AMT Worksheet, called “Worksheet to See if You should Fill Out Form 6251”, of the 1040 Instructions. The IRS estimates it will talk 5 to 10 minutes to get an answer from the new application.
“The alternative minimum tax causes a lot of hair pulling for millions of taxpayers each year. This new tool will help people understand if they have to pay or not,” IRS Commissioner Mark W. Everson said in a prepared statement. “This is part of the IRS effort to improve customer service and reduce return preparation time for taxpayers.”
Most commercial tax preparation software and applications used by professional tax preparers automatically check AMT liability, according to the Washington Post. In addition, AMT liability is also automatically evaluated for those taxpayers who e-file their returns. Despite such screening, the Wall Street Journal points out that thousands of taxpayers were surprised to find that they were subject to the AMT. This year another half million taxpayers, or about 4 million taxpayers total, are expected to owe taxes under the AMT, the Wall Street Journal reports. The number of taxpayers affected by the AMT increases with each passing year because it is not indexed for inflation. This year, the AMT threshold is a minimum taxable income of $58,000 for married couples and $40,250 for individuals, according to the Washington Post. Unless Congress acts to extend the temporary exemption that expired in 2005, that will drop to $45,000 for couples and $33,750 for individuals in 2006. Scripps Howard News Service reports that the average amount owed under AMT last year was $4,000.
The IRS suggests taxpayers complete a draft of their 1040 form before attempting to use the AMT Assistant because some of the data on that form will be needed to calculate the potential AMT liability correctly. The information provided to the AMT Assistant is anonymous and will be used only for purposes of determining AMT liability. The AMT Assistant only calculates potential liability, taxpayers not using tax preparation software, or a professional tax preparer, will need to complete For 6251 to determine whether they really do owe AMT taxes and, if so, how much.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.