FEASIBILITY OF TRUMP’S PROPOSED AMT SCRAP
Even before his unexpected success, Trump has often touted his plans to overhaul the US tax code in his campaign. Among his plans is to eliminate the Alternative Minimum Tax, which has existed for 47 years now. This can be defined as an additional duty added to the regular tariff of certain individuals and corporations initiated by the federal government. Primarily, it was created for the wealthy ones but these population sector usually do not pay it, hence it became a burden for the upper middle class instead. Now the main question regarding this issue is whether or not the succeeding leader can make good on his pledge and remove it.
The AMT can be considered as a second time calculation of your returns. Those who have several itemized deductions are subject to this. It basically recalculates your compensation tax while incorporating preference items into the adjusted gross salary. The procedure operates under a different set of rules in generating the taxable income after permitted deductions.
Last year, the standard cuts in the computation of AMT are:
Married couples/ joint filing: $83,800
Separate filing regardless of marriage: $41,900
Household head: $53,900
As mentioned earlier, this tariff has impacted the middle categories more than the rich in the past years thus a reform is highly clamored from the GOP bet. In case a repeal will actually take place, it would likely be carried out as a part of an amendment package rather than an isolation. Those who will be mainly affected by this will need to carefully consider if the suggested alterations would really be beneficial for them in the long run.
The media, together with analysts and financial experts have been trying to predict the possible consequences of a tax revision based on Trump’s goals. As of present, no forecast on what his decision will be is seen, nor do they have any idea on what will be passed and what the final rendition would look like. Given this, a wise response would be to make plans according to your current tax situation rather than theories. Familiarize yourself with your options and make little adjustments as well.
It is also crucial to keep in mind that these proposals would affect other areas as well such as estate taxes, wherein brackets for the public and businesses may be changed. Another thing, abolishing the AMT would mean a loss of tax revenue for the treasury, especially since it is predicted to generate $350B until year end. The government would now have to compensate for this amount using any measure deemed appropriate.
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