What Is Alternative Minimum Tax?
Alternative Minimum Tax—Individuals See separate instructions. Attach to Form or Form NR. OMB No. Attachment Sequence No. Name(s) shown on Form or Form NR. Your social security number. Part I. Alternative Minimum Taxable Income (See instructions for how to complete each line.) 1. Instructions for Form Alternative Minimum Tax—Individuals Section references are to the Internal you do complete another form, do not Optional Write-Off for Revenue Code unless otherwise noted. attach it to your tax return, but keep it Certain Expenditures General Instructions for your records. However, you may.
Show Threads Show Posts. Go to Page Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. View detailed profile Advanced or search site with Search Forums Advanced. The AMT was basically meant to be a tax on the wealthy that would eliminate a lot of tax loopholes. If you make above K you are subject to a flat tax rate and this eliminates most itemized deductions. The problem with this tax especially in the Northeast where cost of living is high, is that a household income of K does not necessarily mean you are living comfortably.
Especially when you have a mortgage and family to support. This is what is nitrox shock absorber a new tax but the bush tax cuts expire so if you are subject to the AMT you will be paying a higher tax rate. If you don't really claim a lot of deductions then this is not really an issue but if you do claim a lot of deductions then yes, you will be left with less disposable income. The AMT is not a new problem, it has been a problem for a while.
This tax was meant to go after wealthy taxpayers who manipulated their tax returns to pay very little taxes. As the tax stands now it really hits upper middle class families hard as these families who have kids and mortgages who would have been entitled to tax deductions now basically have those tax deductions eliminated. If you live in an area where cost of living is low, K goes a long way, but out here in a state like NJ k will go pretty fast after u figure in mortgage and property taxes.
This article highlights the problems upper middle class AMT tax payers face: Are you a high earner but not rich yet? Higher taxes ahead - Oct. Also the number of households who earn between kk is rather small.
Originally Posted by manderly6. I know there was talk of eliminating the mortgage interest deduction for everyone. I can't fathom enough how to get grandpa gohan in budokai tenkaichi 2 would have the b alls to do this. Originally Posted by artDDS. It will be hard to fix this issue as those who are fabulously wealthy really don't care and that those who do not earn k in household income are not really going to have sympathy.
Last edited by pvs; at PM. Originally Posted by pvs. Some of what I've posted here came from an email I received from an accountant. But I have also found and read this: Taxes The one point that was in the email from the accountant, that I cannot seem to corroborate with online searches, is the elimination of Mortgage Interest as a deductible. That would hurt a lot of people. Has anyone got any information about this actually being part of the plan? A lot of this is coming up because of the expiration of the Bush tax cuts that temporarily "fixed" the AMT and changed the tax rates across the board.
They were always set to expire as of tax year, so this is nothing new. What is up for debate is how it will be handled. The issue right now is that there are 3 seperate main plans being considered and multiple others out there. Nothing is set in concrete yet, but I wouldn't be worried. I don't think we will see a quantum shift as the three main plans Democrat, Repulblican and Obama Budget all make allowances for the continuance of a lot of the tax breaks.
Of course it is easier for the media to report that they will expire and we are all going to pay more, but the truth is that they most likely will be retained for the vast majority. I wouldn't let the decisions regarding federal taxes sway me on a decision to buy a house. If you are ready to buy because buying is the right move for you and your family, then you should buy. Originally What is alternative minimum tax 2010 by bradykp.
What you both are saying here makes a lot of sense. I think the email from the accountant that started my own research into this was being a bit alarming, especially after some of the other bits I've read since yesterday, e.
Bottom-line is all these tweaking and patching of taxes isn't going to solve the issues we have. They need to overhaul the whole system but congress nor the President have the will or political force to get this done Anyhoo that's my two cents. As for whole might not be good time to be homeowner NPR has a few good podcasts for sifting through all the spin. Please register to post and access all how to train your dragon audiobook download free of our very popular forum.
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Advertisements The AMT was basically meant to be a tax on the wealthy that would eliminate a lot of tax loopholes. Quote: Originally Posted by manderly6 I know there was talk of eliminating the mortgage interest deduction for everyone. Quote: Originally Posted by artDDS If you make above K you are subject to how to make a digital tv antenna booster flat tax rate and this eliminates most itemized deductions.
Originally Posted by artDDS The problem with this tax especially in the Northeast where cost of living is high, is that a household income of K does not necessarily mean you are living comfortably.
Originally Posted by artDDS It will be hard to fix this issue as those who are fabulously wealthy really don't care and that those who do not earn k in household income are not really going to have sympathy.
Quote: Originally Posted by pvs Some of what I've posted here came from an email I received from an accountant. Quote: Originally Posted by bradykp bottom line - when considering to buy, don't buy more than you can afford. Quote: Originally Posted by bradykp yeah. City-Data Forum Message. Cancel Changes.
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An alternative minimum tax (AMT) places a floor on the percentage of taxes that a filer must pay to the government, no matter how many deductions or credits the filer may claim. . What Is the Alternative Minimum Tax? The alternative minimum tax is intended to prevent wealthier taxpayers from slashing their taxable incomes to a bare minimum by using all the deductions that are available under the IRC. They must pay the tax if the alternative minimum tax calculation results are more than what they would otherwise owe in that tax year. ? ?. Jun 14, · The Alternative Minimum Tax (AMT) began as a way to keep wealthy taxpayers from using deductions to avoid paying income tax. The AMT’s purpose is to ensure everyone pays a minimum amount of tax. However, Congress hasn’t updated the factors that determine who must pay the AMT. As a result, more middle-income people must pay the AMT.
The Alternative Minimum Tax AMT began as a way to keep wealthy taxpayers from using deductions to avoid paying income tax. As a result, more middle-income people must pay the AMT. Exemption amounts are set by law for each filing status. Since , the exemption amounts have been adjusted each year for inflation. The exemption amounts for are:.
The AMT rate has increased substantially since its creation, but regular tax rates have decreased. So, instead of the AMT rate being much lower than regular tax rates, the regular tax rates are often lower than the AMT rate. It requires you to report adjustments to reflect the differences between the two parallel systems. So, you might have to add back amounts you deducted for regular tax purposes, like personal exemptions. This amount is less for high-income individuals. You must add them back into your income.
The only itemized deductions allowed for AMT include:. In the regular tax system, you can deduct most of your mortgage interest. To learn more, see the Interest on Home Mortgage tax tip. However, for AMT purposes, you might not be able to deduct the interest.
This is true if you use mortgage money to do something on your first or second home other than:. The AMT has different depreciation rules than the regular tax system.
Depreciation is often lower under the AMT. This is true especially for items you put into service before You must figure a separate AMT depreciation for items put into service before if the items were for:. This will also affect the amount of capital gain or loss you realize when you sell the depreciated asset. The basis of the property is equal to its cost adjusted up or down by certain amounts. This includes a downward adjustment for depreciation allowed.
Since you have a higher basis, your gain will be lower or your loss will be greater. This difference in basis usually results in an adjustment in the year you sell the asset. The adjustment will decrease the amount of income subject to AMT. You must track AMT depreciation separately. This requires additional calculations to complete your return. This is usually three-, five-, seven-, and year property under the modified accelerated cost recovery system MACRS. To learn more, see Form instructions.
The ISO is a preference item. To learn more about preference items, see Form instructions. You might exercise an ISO but not sell the stock in the same year you exercised the options. However, for AMT purposes, you must assume something did happen. Usually, an ISO lets you buy stock at a price lower than the current fair market value FMV of a publicly traded stock.
An income item for AMT purposes is the difference between these two items:. However, you might have municipal bonds that are private-activity bonds. If so, you might have taxable income for AMT purposes. This is only true for private-activity bonds issued after Aug.
You might not have any. Your total AMT income and your filing status determine your exemption amount. Exemption amounts for are:. Income taxed at a lower rate — like long-term capital gains or qualified dividends — is still subject to those rates, not the AMT rate.
If you have owned a rental property for many years but have never claimed depreciation, can you catch up and claim it now? Learn more from the tax exp. This link is to make the transition more convenient for you. You should know that we do not endorse or guarantee any products or services you may view on other sites. Tax information center : Income : Other income. Exemption amount Exemption amounts are set by law for each filing status. The AMT is a parallel tax system.
You must: Complete your regular return. Complete AMT Form Compare the two taxes. Pay the higher of the two taxes. You must first calculate your AMT income: If you itemize, start with your income after itemizing deductions. This is true if you use mortgage money to do something on your first or second home other than: Buy Build Substantially improve This affects you if both of these are true: You borrowed on a home equity loan or refinanced your mortgage for a loan that was more than the original debt.
You used some of the money for other purposes, like to buy a new car or pay down credit card debt. You must figure a separate AMT depreciation for items put into service before if the items were for: A business Investment purposes By doing this, you usually spread the depreciation over more years and at a less favorable rate.
Depreciation of real property that fits these requirements: Placed in service after Not depreciated for regular tax purposes using the straight-line method Most property placed in service after and before AMT — Incentive stock options ISOs The ISO is a preference item.
Related Resources Catch-up Depreciation On Rental Property If you have owned a rental property for many years but have never claimed depreciation, can you catch up and claim it now? No matter how you file, Block has your back.
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