Welcome to those who have never visited the site and welcome back to those who have!
Seven years ago ReformAMT was founded in the Bay Area by ISO-AMT sufferers hit with this confiscatory tax policy. The web site and organization grew by word of mouth and by the internet - we currently enjoy member representation in 48 states (315 Congressional Districts), Puerto Rico and 3 countries outside the US. Indirectly, with our work over the years on ISO-AMT we have advanced and notarized the broader issue of AMT ($2k to 4k a year for most).
Phase 1 - Passage of legislation in 2006 - 2007 : Refunds start in 2008 with the filing of your 2007 tax returns
Beginning in 2007, certain taxpayers (only those able to pay some or all of the their Federal ISO-AMT liability, who have waited 3 years and meet the AGI phase-outs) will be able to claim old, unrecovered AMT credits (20% each year over the next 5 years), even when the refund exceeds the current year's tax. This provision can put a lot of money in your pocket if you have a large amount of old AMT credits.
Example: You earn about $120,000 per year and have $22,000 in income tax withholding, which is roughly equal to the amount of tax you would otherwise owe. You also have $250,000 in old AMT credit from stock options you exercised in 2000. You've been recovering about $3,000 of the AMT credit each year, but doesn't put much of a dent in the $250,000. For your 2007 tax returns, you can claim 20% of that credit. When you file your return this year, the Treasury is going to send you a refund check of about $50,000. TAX FREE!
The Phase-Out Rule:
The phase-out rule has enormous, complicated consequences, but the rule itself is relatively simple. The rule states that the amount of credit you can claim in any year is phased out over the same income range used to phase out personal exemptions. For 2007 those ranges are as follows:
| Filing Status |
Begin |
End |
| Married Joint |
$234,600 |
$317,100 |
| Single |
$156,400 |
$278,900 |
| Head of Household |
$195,500 |
$318,000 |
| Married Separate |
$117,300 |
$178,550 |
If you're married filing jointly, and your 2007 modified AGI is at or below $234,600, your refundable AMT credit will not be reduced under the phase out rule (ie - you are entitled to the full 20% refund). Modified AGI for this purpose is your adjusted gross income increased to take into account certain foreign items that are otherwise excluded. If your modified AGI is above $357,100, you are not entitled to any refund under the new law (you can still apply your AMT credits as under the previously existing law). If your modified AGI is between $234,600 and $357,000, the following phase-out calculation applies:
Phase-out calculation or increments above AGI thresholds but below the Cap.
The phase-out works in increments of 2 percentage points for each $2,500 of income ($1,250 for married filing separate). If you're exactly at the border, just $1 of additional income will eliminate another 2 percentage points, but the next $2,499 will have no effect.
Example: You're single and expect your modified AGI to be about $200,000. Subtract $156,400 to get $43,600. Divide by $122,500 to get 35.6%. You can expect this rule to reduce your AMT credit recovery by about 36%.
Phase 2 - House bill H.R. 3861 and Senate bill S. 2389 both pending in the 110th Congress in 2008
The 2006 and 2007 ISO AMT Relief Legislation was an important first step. Finishing the job in the 110th Congress is necessary due to:
- Income caps leave many families out of the relief, particularly those living in high cost-of-living areas.
- The IRS's ongoing aggressive enforcement against people who have been unable to pay and who are now losing their homes, children's education funds, and retirement accounts.
- Need for Fair Relief for All American Families by Removing Phase-outs
Families in high cost of living areas such as the high-tech corridors in Virginia, Maryland, California, and Massachusetts and others are left out of the relief. No family should be taxed on income they did not earn, in addition to being taxed on the income they did earn.
The phase-outs are an economic policy disaster. Employees are now taking steps to reduce their income through leaving highly productive jobs, or taking an extended leave of absence, or retiring early, because of the reverse incentive that encourages (and forces) people to stop working to recover their tax overpayments. Companies risk losing key employees.
- Need to Stop Collection and Abate Interest and Penalties
The IRS continues to seize people's homes and retirement accounts and garnish wages even after the 2006 -2007 ISO AMT Relief Legislation passed. This tragedy can be stopped by:
- Providing for relief in two years instead of five years. Implementing a two-year refund period will help families who have already been suffering for seven years finally recover in two more years.
- Instructing the IRS to stop collection efforts, and to refrain from imposing interest and penalties on amounts taxpayers were not able to pay. For those that paid interest and penalties they would be converted to "credits" and returned.
Here is how you can help
Honestly, you would have NEVER seen your sizeable credits returned the government would have not just woken up one day and decided that they unfairly taxed you and voluntarily returned your ISO-AMT overpayments. Only through the tireless work of ReformAMT and the ISO-AMT coalition these last 7 years are you receiving these refunds.
- Please alert and direct others you know who might helped by our work to the web site - www.reformamt.org. Many of them and their accountants might not be aware of these changes, and they might need to make some drastic life changes in order to qualify for these benefits in years 2-5.
- Register with ReformAMT here. Your membership helps us with Congress, and you will be receive timely "inside" information about future developments. We NEVER share, sell or SPAM our member information. All your information is treated as confidential.
- Make a pledge and donation - http://www.reformamt.org/pledge.php. Please submit your pledge or make a donation to help us cover expenses incurred over these 7 years in bringing you this landmark legislative relief. Remember that you may be getting a 20% refund of your AMT credits in the next couple of months, 100% over 5 years. Very shortly you may also be entitled to the benefits outlined above under Phase 2 too. At this time, we sincerely ask for your help to cover our past bills and our upcoming expenses by making a donation and pledging a small percentage of your refund.
Our severe lack of funds is preventing us from making the progress we need to get our phase 2 legislation passed.
- Contact your senator for support. Go here and fill out the form (it takes only 20 seconds).
- If you live in San Francisco, contact the Speaker Pelosi for support. Go here and fill out the form (it takes only 20 seconds).
Although this information is correct, you should check with your accountant to determine exactly how some of the provision (waiting period/ income CAPS/Phase outs) applies to your particular situation. ReformAMT is in no way providing tax or legal advice, please seek professional advice.
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