Who will be effected if congress does not renew the limit raise on the AMT by the end of the year? Will this change how much will be owed for 2010, and due in April 2011?
According to pages 6 & 7 of the instructions for form 1040 in 2009 AMT was only temporarily patched for the year. Congress can't politically afford to drastically cut AMT exemptions by 30 to 40%, and may even retroactively change it, if it isn't passed by the end of the year (despite the constitution forbidding ex post facto laws) :
What’s New for 2009 ... Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount has increased to $46,700 ($70,950 if married filing jointly or a qualifying widow(er); $35,475 if married filing separately)...
What’s New for 2010 ... Alternative minimum tax (AMT) exemption amount. The AMT exemption amount is scheduled to decrease to $33,750 ($45,000 if married filing jointly or a qualifying widow(er); $22,500 if married filing separately).
So, if you are married, and several regular tax deductions push your income below the AMT exemption amount of $45,000, it's quite possible you would be required to pay AMT, even if you didn't last year. There is a work sheet for AMT in the instructions for line 43, but the IRS also provides an AMT calculator.
According to page 146 (E-8) of the instructions for form 1040 AMT is paid as:
the smallest amount you are allowed to report as your taxable income (Form 1040, line 43). It is also the smallest amount you are allowed to report as your alternative minimum taxable income (AMTI) on Form 6251, line 29. If the [AMT calculation] is larger than your taxable income would otherwise be, enter the amount from column (c) on Form 1040, line 43 [or ...] Form 6251, line 29.
As always, congress finds ways to further complicate things by making a few credits and losses deductible against the absolute minimum you're expected to pay taxes on, making the AMT a misnomer.
Depending on your income, you may owe AMT instead of the taxes from the regular code. Even if you don't do that, you may hit the place where you have to at least check if you owe AMT.
As you probably know, AMT was established early on to catch the wealthiest of tax payers who were able to use various loop holes in the code to pay much less tax than one would expect. Over time the limits on AMT have not risen with the rising wage gap, and AMT catches an increasing number of tax payers each year. If the limit is not raised at all for 2010 then it will catch even more people this year.
AMT has worked it's way into the upper-middle class fairly solidly, especially if you exercise stock options whose strike price is significantly different than the current sale price.