Tax Info Blog: Does Married Filing Separately Provide An AMT Escape Hatch?

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2008 Tax Limits

Retirement Limits

401(k)/403(b)/457 Elective Deferral Limit: $15500

401(k)/403(b)/457 Catch-Up Contribution Limit: $5000

SIMPLE Elective Deferral Limit: $10500 ($2500 catch-up)

Maximum Defined Contribution Pension Contribution: $46000

Defined Contribution Compensation Limit: $230000

Maximum Defined Benefit Pension: $185000

Highly-Compensated Employee: $105000

Key Employee: $150000

IRA Contribution Limit: $5000

IRA Catch-Up Contribution: $1000

Traditional IRA AGI Contribution Limits: $0-$10000 if No Pension/Not MFS, $53000-$63000 S w/pension, $85000-$105000 MFJ w/2 pensions, $159000-$169000 MFJ w/1 pension

Roth IRA AGI Contribution Limits: $101000-$116000 S/HH/QW, $159000-$169000 MFJ, $0-$10000 MFS

Roth IRA Conversion AGI Limit: $100,000

Saver's Credit AGI Limits: $53000 MFJ, $39750 HH, $26500 S

Social Security Taxable Wage Base: $102000

50% Social Security Benefit Taxation Threshold: $25000 Single, $32000 MFJ

85% Social Security Benefit Taxation Threshold: $34000 Single, $44000 MFJ

Extra Standard Deduction for Over 65 or Blind: $1350 Per Incident for Singles, $1050 Per Incident for MFJ

Business Related Limits

Mileage Rate: $0.505 Business, $.014 Charitable, $.019 Moving and Medical

Fringe Benefit Transit Pass Limit: $115 Per Month

Fringe Benefit Parking Pass Limit: $220 Per Month

Child Care Fringe Benefit Limit: $5000

179 Expensing Limit: $128000 in assets, phases out between $510000-$638000 in total assets

Housing Related Limits

Mortgage Acquisition Debt Limit: $1,000,000

Mortgage Home Equity Debt Limit: $100,000 (Diasallowed Under AMT)

Casualty and Theft Deduction Floor: 10% of AGI + $100 (Disallowed Under AMT)

IRA First Time Homebuyer Distribution Limit: $10000

Real Estate Passive Loss Limits: $25000 in Loss, Phases Out Between $100000-$150000 AGI

DC First Time Homebuyers Credit: $5000, Phases Out Between $70000-$90000 ($110000-$130000 MFJ)

Education Related Limits

Coverdell ESA Limits: $2000 Per Child, Phases Out Between $190,000-$220,000 MFJ (Half That for Others)

Tuition and Fee Deduction Limits: $4000 Limit, Disallowed After $160,000 AGI MFJ (Half That for Others)

Hope Credit: 100% of first $1200 in expenses, 50% of $1101-$2400

Lifetime Learning Credit: 20% of up to $10000 in expenses

Hope and Lifetime Learning Credits AGI Phaseout: $48000-$58000 ($96000-$116000 MFJ, $0 MFS)

Education Savings Bond Interest Exclusion Phaseout: $67100-$82100 ($100650-$130650 MFJ)

Student Loan Interest Limits: $2500 Interest Amount, Phases Out Between $115000-$145000 AGI ($55000-$70000 for non-MFJ, $0 for MFS)

Educator Expense Deduction: $250 Per Teacher

Child Related Limits

Personal Exemption:$3500

Personal Exemption Phaseout: $239950-$362450 MFJ/QW, $199950-$322450 HH, $159950-$282450 S, $119975-$181225 MFS

Child Tax Credit: $1000 Per Child, Phases Out at $110000 AGI MFJ/QW, $75000 S/HH, $55000 MFS
Refundable CTC Begins at $12050

Education Credit Phaseout: $94000-$114000 MFJ, $47000-$57000 others

Dependent Care Credit Expenditure Limit: $3000 for One Child, $6000 for Two Children

Child Care Fringe Benefit Limit: $5000

Adoption Credit Limit: $11650 Per Child, Phases Out Between $174730-$214730 AGI

Kiddie Tax Limit: $900

Dependent Standard Deduction: $900, or $300 Plus Earned Income

Health Care Related Limits

HSA Contribution Limit: $2900 single, $5800 family

Over 55 Catch-Up Contribution: $900

HDHP Deductible Minimum: $1100 Single, $2200 Family

HDHP Out of Pocket Max: $5600 Single, $11200 Family

Medical Expense Deduction Floor: 7.5% of AGI (10% if in AMT)

Long Term Care Insurance Premium Limit: <40=$310, 40-50=$580, 50-60=$1150, 60-70=$3080, 70<$3850

Miscellaneous Limits

Standard Deduction: $5450 S/MFS, $8000 HH, $10900 MFJ/QW

Itemized Deduction Phaseout (Pease): $159950 of AGI (Half for MFS)

Miscellaneous Itemized Deduction Floor: 2% of AGI (Disallowed Under AMT)

Capital Loss Limit: $3000

Gift Limit: $12000

Foreign Earned Income Exclusion: $87600

Death Tax Exemption: $2,000,000/45% Rate

Ex-pat Trigger: $139000

Earned Income Credit AGI Limits:
MFJ No Kids: $15880
MFJ 1 Kid: $36995
MFJ 2/More Kids: $41646
Others No Kids: $12880
Others 1 Kid: $33995
Others 2/More Kids: $38646

Max Investment Income for EIC: $2950

2008 Individual Income Tax Brackets

Single
10%: $0-$8025
15%: $8026-$32550
25%: $32551-$78850
28%: $78851-$164550
33%: $164551-$357700
35%: $357701-
Married Filing Jointly/
Qualified Widow(er)
10%: $0-$16050
15%: $16051-$65100
25%: $65101-$131450
28%: $131451-$200300
33%: $200301-$357700
35%: $357701-
Heads of Households
10%: $0-$11450
15%: $11451-$43650
25%: $43651-$112650
28%: $112651-$182400
33%: $182401-$357700
35%: $357701-
Married Filing Separately
10%: $0-$8025
15%: $8026-$32550
25%: $32551-$65725
28%: $65726-$100150
33%: $100151-$178850
35%: $178851-

Corporate Income Tax Brackets

15%: $0-$50000
25%: $50001-$75000
34%: $75001-$100000
39%: $100001-$335000
34%: $335001-$10,000,000
35%: $10,000,001-$15,000,000
38%: $15,000,001-$18,333,333
35%: $18,333,334-

Tax Calendar

Due Dates for Returns
3/15: Corporations, S-Corporations
3/15: S-Corporation Election
4/15: Individuals and Partnerships
9/15: Extension Deadline, Corporations and S-Corporations
10/15: Extension Deadline, Individuals and Partnerships
Estimated Income Tax
First Quarter: April 15
Second Quarter: June 15
Third Quarter: September 15
Fourth Quarter: December 31 (January 15 Individual)
Employment Taxes
1/31: W-2s and 1099s, and Unemployment
1/31: Fourth Quarter FICA
5/1: First Quarter FICA
7/31: Second Quarter FICA
10/31: Third Quarter FICA

TaxProf Blog

March 2009

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2007.10.08

Does Married Filing Separately Provide
An AMT Escape Hatch?

Q: If my wife and I file as married filing separately, will that make us less likely to get hit by the AMT? We each make about $150,000 per year in salary and have $55,000 in joint deductions.
Uncle Sam

A: Those that haven't do so yet should first read my posts on the AMT and the married filing separately status.

It almost never makes sense to file as "married filing separately," since you lose out on all the benefits I describe in that piece. Furthermore, things phase out faster and the bracket widths are more shallow.

What about AMT? Assuming Congress indexes AMT exemptions to current law, this won't help you, either. Both the AMT exemption and AMT brackets for married taxpayers filing separately are half that for joint filers. I suppose there are some cases where filing separately might help, but that would be a fluke.

Bottom line: don't let the AMT tail wag the tax dog. Max out your 401(k), make your charitable contributions, don't tap your home equity, and you'll be fine.

Posted by Ryan Ellis on 2007.10.08 at 12:18 PM | Permalink

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