Form 6251 Updated to Reflect Increased AMT Exemption Amounts for 2012

The IRS has released Form 6251, Alternative Minimum Tax—Individuals, as well as the Instructions to the Form, for the 2012 tax year. The form and instructions reflect the increased AMT exemption amounts as a result of the American Taxpayer Relief Act, P.L. 112-240, enacted on January 2, 2013. The exemption amounts have increased to $78,750 for married individuals filing a joint return and surviving spouse, $50,600 for an unmarried individual or head of household, and $39,375 for married individuals filing separate returns.

A specified amount of a taxpayer’s alternative minimum taxable income (AMTI) is exempt from AMT based on the taxpayer’s filing status and the tax year involved. In recent years, Congress has routinely patched the AMT by providing higher exemption amounts and related relief to prevent its encroachment on middle income taxpayers. Without the 2012 Taxpayer Relief Act, the exemption amounts for 2012 would have reverted to $45,000 for married individuals filing a joint return and surviving spouse, $33,750 for an unmarried individual or head of household, and $22,500 for married individuals filing separate returns.

Although the AMT exemption amounts for individuals have increased for 2012, the threshold levels for the exemption phaseout generally remain unchanged. Thus, the exemption amount for 2012 is still reduced by 25 percent for each $1 of AMTI in excess of: (1) $150,000 for married individuals filing a joint return and surviving spouse, (2) $112,500 for an unmarried individual or head of household, and (3) $75,000 for married individuals filing separate returns (or 50 percent of the dollar amount applicable to married individuals filing a joint return).

For tax years beginning after 2012, legislation will no longer be needed to patch the AMT by providing higher exemption amounts. The AMT exemption amounts, as well as the threshold for the phaseout of the AMT exemption amounts, are indexed for inflation beginning in 2013. In addition, the AMTI threshold for applying the 26- or 28- percent AMT rate will also be indexed for inflation beginning in 2013.