Reply to How much money do you make continued....and do you pay the AMT?

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[quote=SAM2][quote=Anonymous]So what does it depend on?  We make $200K, rent, and have never had to pay it.  ?    [/quote]
I think PP is right. You can think of AMT as just a secondary way of calculating your taxes that uses a lower tax rate but disallows many of the deductions/credits most people get when calculating your taxes the standard way. You're most likely getting snagged by AMT if you have lots of deductions (eg, big mortgage deduction, state and local tax deductions, large charitable deductions, business expenses, etc).

It's not really an extra/additional tax (although it often feels that way), but rather just an alternative calculation to make sure some people aren't escaping a bare minimum tax because of many large deductions. I recall reading how politicians who wanted to champion tax cuts could cleverly rely on the AMT to protect them from actually having to cut taxes, while still getting credit for making cuts. In other words, they could claim credit for making big cuts to the primary tax rates, but they knew that the AMT would limit those tax cuts and mean that no one was actually paying much less in taxes, so the government budgets could be protected. So if you're feeling the pain of AMT, and you want to blame someone, you really should blame those politicians who promised you tax deductions. They were giving with one hand, and taking away with the other.[/quote]

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