Anyone falling victim to the Alternative Minimum Tax this year? According to my local paper, it affects people with as little as $50,000 income (if you have several deductions).
The AMT basically says -- Boon help me out here -- that you pay the HIGHER of two ways of figuring your taxes. And the AMT eliminates most deductions.
It was initially put into law because of some extremely wealthy people being able to avoid taxes altogether in the 1960's. Since then, inflation has made it so that the AMT now applies to millions of people in the US, and it's growing by leaps and bounds every year. Last year, 6 million people got hit by it. This year, it'll be 12 million.
And President Bush hasn't asked for it to be repealed. He's asked Congress to stop it's growth this year.
But why not get rid of it?
Because our government REQUIRES it to make ends meet. It has become dependent on that extra money growing each year.
Thanks guys!
We luv ya!
Posted by Boon (Member # 4646) on :
To make sure that taxpayers with substantial income are not able to avoid paying tax, the law limits the benefit a person can receive from favorable treatment of certain items. The AMT uses a separate accounting method with its own unique rules that govern the recognition and timing of income and expenses.
If the AMT calculation results in a higher tax than regular income tax, the difference is added to regular income tax on Form 1040. In effect, the taxpayer is liable for either the AMT or regular income tax, whichever is higher.
New provisions that affect AMT include:
AMT exemption amounts increased for 2003 and 2004 to $40,250 for single and HOH, $58,000 for MFJ, and $29,000 for MFS.
The 50% special depreciation allowance is included in computing depreciation for AMT purposes (so no adjustment is necessary on Form 6251). (Depreciation is normally used on real estate, vehicles, and other property used to produce or collect taxable income.)
The new qualified dividend income and long-term capital gain tax rates (5% and 15%) apply for AMT purposes as well as regular tax purposes.
The AMT tax preference amount for qualified small business stock (that qualifies for the Section 1202 exclusion) is reduced to 7% of the excluded gain for sales on or after May 6, 2003.
The AMT tax preference continues to be 42% of excluded gain for sales before May 6, 2003.
AMT, in short, SUCKS! As Bob pointed out, it's a good thing for us to have so that wealthy people DON'T get too many tax breaks, but it's increasingly common among what I consider middle class America.
Yet another way for the IRS to make things more confusing than they have to be...
You know, I really shouldn't complain too much. If the tax code weren't so complicated, I'd be out of a job!
Posted by fugu13 (Member # 2859) on :
And of course, though Congress and the President both have announced their intent to raise the amount you have to make before the AMT kicks in, Bush's administration is not including that in their budget projections.
Posted by Bob_Scopatz (Member # 1227) on :
The best thing I've ever heard about taxes, Boon! They keep you employed!!!
<goes to pay taxes happy now!>
Actually, I'm waiting for the silly form so I can DO my taxes....
[ February 22, 2004, 12:47 PM: Message edited by: Bob_Scopatz ]
Posted by Boon (Member # 4646) on :
Put your cursor in the second box down on the left, put in the form you need. Voila! Instant gratification, PDF style!
Posted by aspectre (Member # 2222) on :
But there was a repeal&rebate on the AlternativeMinimumTax, for corporations. Your problem is that you earn mere thousands rather than millions or billions of dollars.
[ February 22, 2004, 06:53 PM: Message edited by: aspectre ]
Posted by Dagonee (Member # 5818) on :
aspectre,
As far as I've been able to find, the bill under consideration to repeal the corporate alternative minimum tax also repeals the individual alternative minumum tax:
quote:SEC. 3. (a) REPEAL IN 2011- Subsection (a) of section 55 of the Internal Revenue Code of 1986 is amended by adding at the end the following new flush sentence:
`For purposes of this title, the tentative minimum tax on any taxpayer other than a corporation for any taxable year beginning after December 31, 2012, shall be zero.'.
Do you have some other information on this you could link?
Dagonee
Posted by katharina (Member # 827) on :
Boon Oh Wise Tax Woman,
Should I get someone to do my taxes? At what point is it better to get someone else to do them?
Posted by Bob_Scopatz (Member # 1227) on :
Boon, sorry...I didn't specify, I need a form that's got to come from the company accountants and they always take until March sometime...
Ugh.
Posted by Bokonon (Member # 480) on :
kat, any time you sell equities, and own property, would be a good time to go to an accountant.
Now I admit I'm lucky that my dad is a good friend with a reputable accountant, so I get all my taxes done by him, for cheap ($50). I just sent mine out, in fact. I'll be getting a decent return this year (oh the joys of owning property).
-Bok
Posted by Dagonee (Member # 5818) on :
aspectre, I'm interested in hearing if you have a response to my question in this thread.
Dagonee
Posted by Suneun (Member # 3247) on :
Ooooh, Boon, can I ask you a tax question?
My parents do my taxes, and they have investment in my name they pay taxes on for me. But I do some circus performance now, and haven't told my parents. My performing is paid through a non-profit school. Do I have to declare that money, or only if it goes above a certain amount? Like last year, I only made $150 or so from it. Eeek =)
![[Big Grin]](biggrin.gif)