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1. Tax laws provide
tax benefits for certain kinds of income and allow special deductions
and credits for certain expenses. These benefits can drastically
reduce some taxpayers’ tax obligations. The Alternative Minimum Tax
attempts to ensure that anyone who benefits from these tax advantages
pays at least a minimum amount of tax.
2. Congress created
the AMT in 1969, targeting a small number of high-income taxpayers who
could claim so many deductions they owed little or no income tax.
3. Because the AMT is
not indexed for inflation, a growing number of middle-income taxpayers
are discovering they are subject to the AMT.
4. You may have to
pay the AMT if your taxable income for regular tax purposes plus any
adjustments and preference items that apply to you are more than the
AMT exemption amount.
5. The AMT exemption
amounts are set by law for each filing status.
6. For tax-year 2008,
Congress raised the alternative minimum tax exemption to the following
levels:
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$69,950 for a
married couple filing a joint return and qualifying widows and
widowers
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$46,200 for singles
and heads of household
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$34,975 for a
married person filing separately
Taxpayers in Four
States File
with Different Centers this Year
The Internal Revenue
Service announced that taxpayers in Delaware,
Illinois, New York
and Rhode Island
who file paper income tax returns will send them to different
processing centers this year.
Taxpayers in
Delaware, New York
and Rhode Island will now send their
tax returns to the IRS
Kansas City Service
Center in Kansas
City, Mo. Taxpayers in
Illinois will now send their tax returns to the
IRS Fresno
Service Center,
in Fresno,
Calif.
The IRS continuously
monitors work flow at its centers and makes appropriate adjustments by
altering the volume of returns to be sent to each. Taxpayers who use
the envelope provided with the income tax instructions do not have to
be concerned with the address change, their returns automatically will
go to the correct center.
Taxpayers who e-file
will not be affected by the address changes. The majority of filers
choose IRS e-file; it’s faster, easier, more accurate and more
convenient than filing a paper tax return.
For taxpayers who
file paper returns, the correct center addresses are on labels inside
the tax packages they receive in the mail. Taxpayers who do not
receive a package and need the service center address should refer to
the back cover of the instructions to Form 1040, 1040A and 1040EZ.
Are Your Social
Security Benefits Taxable?
How much, if any, of
your social security benefits are taxable depends on your total income
and marital status. Generally, if social security benefits were your
only income for 2008, your benefits are not taxable and you probably
do not need to file a federal income tax return.
If you received
income from other sources, your benefits will not be taxed unless your
modified adjusted gross income is more than the base amount for your
filing status. Your taxable benefits and modified adjusted gross
income are figured in a worksheet in the Form 1040A or Form 1040
Instruction booklet.
Before you go to the
instruction book, do the following quick computation to determine
whether some of your benefits may be taxable:
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First, add one–half
of the total social security you received to all your other income,
including any tax exempt interest and other exclusions from income.
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Then, compare this
total to the base amount for your filing status. If the total is
more than your base amount, some of your benefits may be taxable.
The 2008 base amounts
are:
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$32,000 for married
couples filing jointly
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$25,000 for single,
head of household, qualifying widow/widower with a dependent child,
or married individuals filing separately who did not live with their
spouses at any time during the year
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$0 for married
persons filing separately who lived together during the year
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