AMT -- about how much do you have to make to be subject to it?

[Anonymous]

Anonymous wrote:Thanks for the replies. We have 3 (soon to be 4) kids, but our mortgage interest and property taxes are not that high because we live far out in a small house. I'll definitely have to run some numbers and see if we might hit it this year. But good to know that even if we do, it probably won't be a huge number.

Mortgage interest isn't an AMT trigger (with the exception of some second mortgages). Property taxes are, though.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's not how much money you earn, it's how your AMT preference items stack up against that income.

It's possible to be a family of five with a kid in college and hit the AMT with an income of about $50,000. Or at least it was a few years ago.

It does seem to hit families who earn between about $200,000 and $500,000 who:

-- Have multiple children (the AMT treats children as an illegal tax shelter and disallows exemptions for them)
-- A lot of state and local income tax deductions (i.e., if your property tax is high as well as your state income tax).

Other common AMT triggers include:

-- Mortgage interest on a second loan (but not a primary mortgage)
-- Medical
-- Exercise of incentive stock options.

There are a bunch of others but those are the big ones I know off the top of my head.

There is an 80k exemption for married couples filing jointly, plus you deduct interest on you home. Children are not an "illegal tax shelter". No one is going to pay it. On 90k.
It is a very reasonable tax, and much of the reason more people are being caught by it is because of the ridiculous bush tax cuts.

Your facts are wrong. Or, rather, incomplete.

The 80K exemption is true. But then everything above that is taxed at 26% (or 28% for higher incomes). That's basically a flat rate -- no graduated rates like under the normal situation.

AMT most definitely treats children as an illegal tax shelter. That 80K exemption is in place of all the other preference items. Personal exemption is a preference item, ergo, children are treated as a tax shelter they want to take away from you.

It was true that more people got caught in AMT due to the Bush tax cuts, but that's no longer true since it was permanently indexed for inflation under President Obama.

[Anonymous]

Anonymous wrote:We make about $240k with 1 kid and a not crazy house (so moderate property tax) and live in VA ( so not super high state tax) and have never triggered it.

How?

[Anonymous]

Anonymous wrote:

Anonvttymous wrote:We make about $240k with 1 kid and a not crazy house (so moderate property tax) and live in VA ( so not super high state tax) and have never triggered it.

How?

Because we pay enough in taxes that our taxes are higher than the amt for our income. It's not like we are getting away with something.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonvttymous wrote:We make about $240k with 1 kid and a not crazy house (so moderate property tax) and live in VA ( so not super high state tax) and have never triggered it.

How?

Because we pay enough in taxes that our taxes are higher than the amt for our income. It's not like we are getting away with something.

Yeah, this sounds right. Income of $240 and one kid and small mortgage and you're probably not claiming that many deductions. Would put much of your income in the 28% bracket and potentially some in the 33% bracket, which is going to add up to more than what the AMT would cost.

[Anonymous]

HHI of $230 and paid AMT for the first time this year. No kids or mortgage. First year married and incomes of $135+80+investments. Charitable donations were about $3k

[Anonymous]

The reason why kids are a trigger for the AMT is because when the child tax credit was increased to $1000, Congress was living under "pay as you go" rules-- which meant that any tax cuts had to be paid for with tax increases elsewhere (or other revenue streams-- that is why federal student loans cannot be discharged in bankruptcy for any reason, because Congress wanted to use the "savings" from not discharging loans for other tax breaks).

If they made the child tax credit subject to the AMT, then they could take political credit for it, while not having to come up with as much in revenue to offset it.

[Anonymous]

Anonymous wrote:The reason why kids are a trigger for the AMT is because when the child tax credit was increased to $1000, Congress was living under "pay as you go" rules-- which meant that any tax cuts had to be paid for with tax increases elsewhere (or other revenue streams-- that is why federal student loans cannot be discharged in bankruptcy for any reason, because Congress wanted to use the "savings" from not discharging loans for other tax breaks).

If they made the child tax credit subject to the AMT, then they could take political credit for it, while not having to come up with as much in revenue to offset it.

This isn't accurate at all.

http://www.taxpolicycenter.org/taxtopics/encyclopedia/child-tax-credit.cfm

To wit: "The child tax credit is allowed in full against a taxpayer’s alternative minimum tax."

[Anonymous]

Anonymous wrote:OP, if your husband's firm does business in other states to the point where you are going to have filing obligations in multiple states and figure out all the rules that apply to partnership income, then the AMT is the least of your worries. Maybe it's time to start consulting with a CPA?

It's a small firm and they take care of all the tax stuff for the business. I'm pretty sure there are no filing obligations in other states.

RE the whole kids thing, the AMT Assistant on the IRS website does not ask about the number of exemptions you claim when it is evaluating whether you need to fill out form 6251. It does ask about medical/dental, state/local taxes, and unreimbursed job expenses. I guess the deal is just that you lose some of those exemptions if you are otherwise determined to be subject to the AMT. Which I do think is unfair -- children are the most legitimate tax shelter there is! Why didn't they just abolish the damn thing when they had the chance? It's needlessly complex.