Are you surprised that you are paying more tax this year and your income didn’t really change for 2007? Check out page 2 of your 1040 tax return. Is there an amount on line 45? If there is an amount, I bet you’re saying” What the heck is Alternative Minimum Tax?” That’s what we’re here to talk about.
Alternative Minimum Tax (AMT) is a special tax that originally was only for the wealthy. Back in 1969, the wealthiest taxpayers weren’t paying any tax. So Congress devised a way to get them to pay at least some tax. And it’s called AMT and here’s how it’s calculated.
The tax return is run twice. The first time is with all of the usual income and deductions. The 2nd run of the return is without certain deductions such as state withholding tax and with additional income that isn’t included on the first run. The tax rate is either 26% or 28%. The wealthy taxpayer had to pay at least the tax that showed up on the second run – their AMT tax.
Now you’re saying ….but I’m not wealthy! Well, AMT tax is now hitting the middle class. And here’s why. Regular tax items like tax brackets, standard deduction, exemptions are indexed for inflation. So over time, these items increased. However, the exemptions and tax rates for AMT purposes are not indexed and have not increased.
If you’re hit with AMT, I’m sure that you have plenty of questions. To learn about AMT, just click on link below to go to a recording of a recent webinar we held on AMT. You’ll get all your questions answered.
Here’s the agenda for the AMT webinar:
- Explains Alternative Minimum Tax
- Describes How the AMT Works
- Identifies Tax Strategies to Mitigate AMT
- Shows How TurboTax Can Help You
When you click the link, you’ll hear the speakers and see the step by step screen presentation. The speakers are Bob Meighen, CPA, the Vice President of Customer Advocacy for TurboTax and the tax expert, Anne Schetter-Clark, CPA.
Remember that the webinar was initially geared for a live audience. You’ll see that it starts at an odd place. Bob is in the middle of explaining to the attendees about the new technology of the webinar.
Hang in there….it will be just a few seconds and he’ll start explaining the AMT world.
Remember, it’s a recording; you can’t ask questions and can’t call the number listed.
Now, click here and learn everything you ever wanted to know about AMT: