One of the key questions lurking in the “fiscal cliff” talks — though well below the public’s radar — is what happens to the alternative minimum tax, or AMT.
Implemented in 1969 to make sure upper-income Americans pay their share of taxes, the AMT has increasingly snared more middle-income Americans over the years because it was never indexed for inflation.
During the 2011 tax year for example, the AMT hit single taxpayers with incomes as low as $48,450 and joint filers making only $74,450.
But millions more Americans could be subject to the AMT in their 2012 returns if Congress fails to reach a deal on the fiscal cliff before year-end. That’s because the AMT is currently scheduled to hit individuals making as little as $33,750 a year and joint filers making $45,000. …
“Normally some four million people pay the AMT,” Hoey explained. “But if we don’t fix this on the 2012 income, what’s due in 2013 will be additional taxes by an extra 28 million households. If you’re in the $75,000 to $300,000 income bracket, you can likely forget about a refund if they don’t fix it.”