The AMT is meant to ensure that taxpayers with a lot of deductions to their adjustable income pay a minimum in federal income taxes, but it is not indexed to inflation. Each year, Congress passes a bill in order to address this problem. The patch hasn't yet been passed, and time is short, because the Internal Revenue System needs to know the AMT rules for 2012, in order to do process tax returns and tax refunds in a timely fashion, beginning in January.
Acting IRS Commissioner Steven Miller sent a letter to Congress in November and
last Wednesday, saying that "the most recent AMT Patch, and the exemption amounts of $74,450 for joint filers and $48,450 for single taxpayers, expired at the end of 2011," and that without a new patch for 2012, "the current-law AMT exemption amounts are much lower: $45,000 for joint filers and $33,750 for single taxpayers."
"This means that 30 million additional taxpayers will become subject to the AMT on their 2012 income tax returns."
Discussions between the President and the Republican leadership of the House of Representatives are expected to resume on Thursday, giving the Washington crew plenty of time to rattle investors' nerves before the end of the year.
KBW Bank Index
was down slightly to close at 51.07, with all but five of the 24 index components seeing declines.
Written by Philip van Doorn in Jupiter, Fla.