Anyone else getting slammed with a huge tax payment this year?!

[Anonymous]

Anonymous wrote:Yes---my husband woke me with the news that we owe 70k in taxes. WTF??? I must have had him repeat it three times....did you say 17k?...him: No- 70k.

I am floored. I know we've paid in the teens-20k in the past...but 70K?! We have 2 kids under 4 and just bought a second home last Fall..but we aren't eligible for any of the tax credits that normal ppl get.

The good news (ha- yeah right) is that he thinks it should be closer to $50k and will get back to accountant this week.

my DH is self-employed. pays himself a certain amount. We've only paid about 28K so far this year--hence the big lump payment now.

Our AGI was 250,000 and we paid roughly $52K in taxes. We had no major deductions.

[Anonymous]

jsteele wrote:

Anonymous wrote:Who can explain the AMT to me? Please dumb it down so I understand it.

AMT is supposed to ensure that everyone pays a minimum amount of tax. It was designed decades ago to catch people who used loopholes to escape their fair share of taxes. However, AMT is not indexed to inflation. As a result, many people for whom AMT was never intended now fall into AMT territory.

I used to think that AMT was an either/or proposition. Meaning that either you paid regular income tax or AMT. Now I realize that you first figure your regular taxes and then, if they aren't high enough, AMT gets tacked on.

I would add that if you are in AMT territory, you really should seek tax planning advice. Sometimes there is nothing you can do, sometimes there are strategies related to accelerating / decelerating deductions / income, that a CPA can assist with. I don't do this line of work, but work with people who do, so I know enough to be "dangerous" and that this is what I'll do if we encounter AMT.

I've also always thought the concept of a flat tax is interesting, with an exemption for a portion of income to level things out. CPAs would have a fit though! And there is no way the tax code is going away. But it is a mess if you've ever attempted to navigate it.