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Alternative Minimum Tax
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Anonymous
| Anyone else out there hit by this monster? We have a mortgage, two jobs, and two kids. Now we owe $8,000 in taxes, despite highest bracket witholding throughout the year. We are under no circumstances wealthy, nor do we live lavishly. It is so unfair an no one seems to have the political will to do anything about it. |
Anonymous
| May I ask what triggered the AMT for you? One of the worst things about it is that there seems to be no way of predicting when it will hit you. The way it is described in the media, it's as if some mysterious force appeared out of nowhere. An overstatement, I know, but it captures this feeling of dread I have that it will hit us. This year we avoided it -- but next year, who knows? |
Anonymous
| Yes, it hit us after our son was born and we got to declare him on our taxes. Nothing makes me angrier about our tax system. |
Anonymous
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AMT is triggered by income - generally if you earn combined 150K a year you might be subject to it. Gotta love it...
AMT basically takes away your deductions for state and local taxes (income and property) and your personal exemptions - so those kiddos no longer help you reduce your taxable income. In an area like DC where 3-4K monthly mortgages are common, families often are solidly middle class and still pay this tax. That 150K a year is about 90K after taxes, and fully half of it goes to the mortgage check. Take out another 2K monthly for childcare, and you are left with less than 2K month to cover your utilities, car payments, student loan payments, food, clothing, and the occasional modest vacation. Not poor, certainly, but far from rich. |
Anonymous
| But that's what makes it so mysterious -- I believe our adjusted gross income has topped 150K for the last two years but we've still avoided it. I don't have a clue as to why -- guess I should email the accountant and get him to explain this to me. |
Anonymous
| I agree with PP--we made 240K last year and had 56K in itemized deductions but were not subject to AMT. |
Meconbear
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| PP was that $240K with or without contributions to 401K? Our accountant (who is not the brightest it turns out and who we are getting rid of) managed to work it so that we were wihtin 3K of the AMT so we were hit this year (AMT tops out at $350K and starts at 150K). We reported $347K. Moron. She didn't give me a straight answer as to whether if we saved 4K less in our 401Ks whether it would have been better for us. As it is, we're paying 6K in taxes back, being hit with some $120 penalty for not withholding enough, and paying an additional $4K in nanny taxes. Sigh. |
Anonymous
| We each maxed out 401K's so our taxable income was around 200K. |
Anonymous
| I normally do our taxes, but this year I think I need some additional help. We, too, were hit this year pretty hard by the AMT. Does anyone know a tax preparer who can review what I've done? I know it's last minute, but I would like to get a second opinion to be sure before I write that check. |
Anonymous
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Oh how i hate AMT! It is basically a parallel tax system. So you need to be an accountant or a super brain to figure out if you are hit with it. We have 3 kids and 2 jobs and we've paid it for the last 5 years or more.
It is a flat tax system and the only thing that we can do to get more deductions is give to charity and get a bigger mortgage (only on first home not second). I'm sure there are other things but for us that seems to be the only deductions that work. THis year our agi was 375K and we paid $7300 in Amt. It penalizes us for having 3 kids and living in high tax area (and high cost of living area where making that kind of money still puts you middle class living). Please IRS fix this so that there is only one tax system!!! |
Anonymous
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AMT basically makes sure that you pay a certain percentage of your income. You get hit with it when you are:
a) high income b) have a lot of deductions, perhaps because you live in a high tax high property value sort of place. c) lots of kids. If you were on it one year, you probably will be on it the next. It sucks. |
Anonymous
Sounds like a load of cr@p! We got hit the last year when I worked before DS was born. Now that we're poor agian on one income, unfortunatly we don't have to worry about it 
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