US 2006 Tax Law Changes

Some 2006 Tax Law Changes

The Earned Income Credit and Alternative Minimum Tax have been modified with regards to income limits. Essentially these items have been enhanced so that larger demographics can receive tax relief. Both of these items affect middle class individuals and have been increased so that the amount of earned income one can earn in order to qualify or in the case of the Alternative Minimum to be exempt. Exemptions for the Alternative Minimum Tax gave increased to $42,500 to individuals, $62, 550 for married joint filers or widows, and $31,275 for those filing individually but are married.

2006 Federal Tax Laws

Minimum exemptions now exist for children under age 18, whereas before the age limit was 14. Exemption from this tax is a great help to those middleclass taxpayers that may be feeling a heavy-handed pinch from the IRS.

The Earned Income credit is a method to reduce ones tax burden and have more cash in pocket for certain types of employed persons that make less than $38,000 per year. This is a highly popular tax credit aimed at providing tax relief to middle class peoples who have typically been caught paying higher taxes than their bracket peers. Basically the earned income amount is higher than previously set for qualifying for the credit. Also these numbers have increased for people filing jointly.

IRS 2006 Tax Law

Earned income credits amounts have increased to 42,747 if one child qualifies, $4536 if more than one child qualifies and $412 if there are no qualifying children. One now qualifies for the credit if Individuals have on child able to qualify and earned less than $36,348, $38, 348 if jointly filed, or one child that qualifies and earned less than $32001, $34001 if jointly filed. No qualifying child and earned less than $12,120 or $14,120 if filed jointly. There have also been increases in investment income, to $2,800 and how much one can get in advance from their employer is up to $1,648.

2006 new tax law changes effect credits for residential and vehicle efficiency
Some other changes have come through the electric and alternative motor vehicles credits, including an expanded list of vehicles qualified, and credit expansions of up to 3400 for the most fuel- efficient vehicles. As new vehicles come onto the market certain older models are moved off the credit schedule. This revolves around the end of the fiscal year so one should be aware of the schedule of credit phase out as this decreases by 25% as time moves along.