What Happened to the Alternative Minimum Tax?

Filed in Codes and Regulations, tax reform toolkit by on July 5, 2018 0 Comments

tax reform toolkitAs tax reform negotiations pressed forward last year, there were high hopes that the dreaded individual alternative minimum tax (AMT) would be repealed. While the corporate AMT was abolished permanently, the individual AMT still exists.

However, the AMT rules are now more taxpayer friendly, and other changes to the tax code reduce the odds that NAHB members will owe the AMT while the changes are in effect (tax years 2018 through 2025).

More than five million taxpayers owed the AMT, according to the most recent IRS statistics. Under the new Tax Cuts and Jobs Act, this number is expected to fall to somewhere between 200,000 (according to the Tax Policy Center) and 500,000 (the estimate from the Joint Committee on Taxation).

Although the law greatly reduces the odds that you will owe the AMT for 2018-2025, do not assume that you are now exempt. This is especially true if some of the AMT risk factors that remain under the new law apply to you. Not paying the AMT if you owe it will result in underpayment and therefore back taxes, interest, and possible penalties.

Talk with your tax professional to figure out if you are still hit by the new and improved (albeit temporary) AMT. And read this Eye on Housing blog post from NAHB economist David Logan to get more detail.

 

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