![]() $80,450 for married taxpayers who file separately.$1,020,600 for married taxpayers who file jointly.Your exemption begins reducing by $0.25 for each dollar you earn over these phaseout thresholds, which also depend on your filing status. $42,250 for married taxpayers who file separate returnsĪ phaseout rule comes into effect if you earn a lot more than the applicable exemption for your filing status.$111,700 for taxpayers who are married and file joint returns.They would only have to pay the AMT on any portion of their earnings that might exceed these thresholds that are set according to filing status. So exemptions were put into place allowing taxpayers to subtract a certain amount from their incomes. The problem with the AMT was that some middle-income individuals were undeservedly finding themselves ensnared by it, and that was never the intention. This method evolved into the alternative minimum tax in 1982. The government, therefore, passed legislation to provide an alternate way of calculating taxes, effectively without claiming all those deductions. ![]() The rationale was that these taxpayers had more to spend, and spend it they did – on expenses that would seriously whittle away at their incomes under the tax laws at that time. ![]() ![]() Treasury Secretary Joseph Barr realized that high-income individuals were snagging so many available tax deductions that they were paying zero, or close to zero, in federal income taxes. The alternative minimum tax came into being in 1969 when U.S. The AMT is designed to target higher-income taxpayers, although some middle-income Americans were caught by it in years past. Don’t panic quite yet if you earn a modest income. ![]()
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