Anonymous wrote:My understanding is that AMT was originally designed to prevent the independently (not high wage earning) wealthy from unfairly sheltering their assets in ways that avoid tax contribution.

IMHO, AMT has now become a political safety-valve tax. Politicians from both sides can claim they cut taxes or held them steady, because they know the stealth AMT will ensure enough money is collected to provide all the government services people want.

Politicians love to brag about cutting taxes, but they don't want to be responsible for the pain of budget cuts. So the AMT allows them to rob Peter to pay Paul.

This is exactly right-- the Bush tax cuts were passed knowing that the AMT would recapture a large chunk-- so the R's took credit for cutting taxes while not having to provide offsets for the full cost of the tax cuts.

Anonymous wrote:

Anonymous wrote:How about mortgage interest on a 5 million dollar house, what is the cap on that?

$1M max

Just to be clear, the max is $1M in interest, not a $1M home ... So if your interest rate is 4% you could write off all the mortgage interest about $1M on a $25M mortgage.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:AMT hasn't been adjusted for inflation so it doesn't just trap rich people.

The IRS disagrees with you about whether the AMT has been adjusted for inflation.

http://www.irs.gov/uac/Newsroom/Annual-Inflation-Adjustments-for-2013

can we get a refund for all the times we paid amt in the past

Why would you expect a refund for paying what the law says you owe?

Not to mention that there were also adjustments for inflation for 1993-2000, 2001-2002, 2003-2005, 2006, 2007, 2008, 2009, 2010, and 2011 -- in addition to the permanent adjustment for 2012 and beyond.

Anonymous wrote:My understanding is that AMT was originally designed to prevent the independently (not high wage earning) wealthy from unfairly sheltering their assets in ways that avoid tax contribution.

IMHO, AMT has now become a political safety-valve tax. Politicians from both sides can claim they cut taxes or held them steady, because they know the stealth AMT will ensure enough money is collected to provide all the government services people want.

Politicians love to brag about cutting taxes, but they don't want to be responsible for the pain of budget cuts. So the AMT allows them to rob Peter to pay Paul.

7:59 here. I agree, the AMT is a safety valve for lazy politicians who can't manage to do the hard work of fixing the tax code.

Anonymous wrote:

Anonymous wrote:AMT hasn't been adjusted for inflation so it doesn't just trap rich people.

The IRS disagrees with you about whether the AMT has been adjusted for inflation.

http://www.irs.gov/uac/Newsroom/Annual-Inflation-Adjustments-for-2013

can we get a refund for all the times we paid amt in the past

Anonymous wrote:AMT hasn't been adjusted for inflation so it doesn't just trap rich people.

The IRS disagrees with you about whether the AMT has been adjusted for inflation.

http://www.irs.gov/uac/Newsroom/Annual-Inflation-Adjustments-for-2013

AMT hasn't been adjusted for inflation so it doesn't just trap rich people.

My understanding is that AMT was originally designed to prevent the independently (not high wage earning) wealthy from unfairly sheltering their assets in ways that avoid tax contribution.

IMHO, AMT has now become a political safety-valve tax. Politicians from both sides can claim they cut taxes or held them steady, because they know the stealth AMT will ensure enough money is collected to provide all the government services people want.

Politicians love to brag about cutting taxes, but they don't want to be responsible for the pain of budget cuts. So the AMT allows them to rob Peter to pay Paul.

Anonymous wrote:

Anonymous wrote:OP, stop whining. The mortgage interest deduction is a HUGE benefit for people in the middle and upper classes. In fact, your more expensive home in a good school district gets more tax breaks.

It's actually not because of the limit and then itemized deductions get phased out above a certain income. You needn't worry your envious little head, the "rich" are getting screwed really well.

.

If there was a "toddler tantrum" tax, tea baggers like this one would be broke.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, stop whining. The mortgage interest deduction is a HUGE benefit for people in the middle and upper classes. In fact, your more expensive home in a good school district gets more tax breaks.

It's actually not because of the limit and then itemized deductions get phased out above a certain income. You needn't worry your envious little head, the "rich" are getting screwed really well.

The AMT doesn't limit the mortgage interest deduction, friend. Well, it places limits on interest from second mortgages used for things other than a home purchase or improvement. But, people who pay AMT still get to deduct their full mortgage interest on any first trust.

Does limit the deduction for local property and income taxes paid, however. And treats children like an abusive tax shelter.

But again, if you're paying really high property and state/local income taxes, then you are pretty rich, and the point of the AMT is to get rich people to pay a somewhat higher overall tax rate than their house cleaners and yard people. I do agree that the tax treatment of children shouldn't be a part of it.

We've been subject to the AMT for years, so no envy here (why do tea baggers always sound like such childish idiots?). While I think the AMT is a blunt instrument as opposed to, you know, closing actual tax loopholes that benefit the extremely rich, I generally support the intent.

Anonymous wrote:

Anonymous wrote:OP, stop whining. The mortgage interest deduction is a HUGE benefit for people in the middle and upper classes. In fact, your more expensive home in a good school district gets more tax breaks.

It's actually not because of the limit and then itemized deductions get phased out above a certain income. You needn't worry your envious little head, the "rich" are getting screwed really well.

The AMT doesn't limit the mortgage interest deduction, friend. Well, it places limits on interest from second mortgages used for things other than a home purchase or improvement. But, people who pay AMT still get to deduct their full mortgage interest on any first trust.

Does limit the deduction for local property and income taxes paid, however. And treats children like an abusive tax shelter.

Anonymous wrote:

Anonymous wrote:How about mortgage interest on a 5 million dollar house, what is the cap on that?

$1M max

$1.1 million ,actually.

Anonymous wrote:

Maybe that person, who seems a little ignorant, is confusing college tuition with tax-preferred college savings plans like 529 plans?

I imagine this person is referring to the tuition and fees deduction, which allows you to deduct some amount of the income used towards tuition and fees, and is phased out at incomes that are often discussed at this board (160K joint or something like that?). There is also the American Opportunity tax credit and Lifetime learning tax credit, but I believe those would also be phased out at incomes frequently discussed on this board as well. They also tend to be less relevant for people who use savings plans like 529s, but I'm not 100% sure of the details.

You can deduct up to $4k in tuition and fees (but not room and board) so long as you are not also taking the American Opportunity or Lifetime Learning tax credits, and so long as the deducted tuition was not paid for from a Coverdell or 529 account (this is so you don't double dip on tax savings). It phases out at higher incomes like PP said. The full $4k is available for single filers with MAGI=$65k and couples with MAGI=$130k. Above these incomes and up to income=$80k for singles and income=$160k for couples, the tax break is for paying college tuition and fees up to $2,000.

So this doesn't really help OP in the sense that it's somehow a tax break for rich people who pay for education. It's to help lower- and middle-income families pay for higher education, on the grounds that there are no free higher education alternatives, as there are with K-12.

Maybe that person, who seems a little ignorant, is confusing college tuition with tax-preferred college savings plans like 529 plans?

I imagine this person is referring to the tuition and fees deduction, which allows you to deduct some amount of the income used towards tuition and fees, and is phased out at incomes that are often discussed at this board (160K joint or something like that?). There is also the American Opportunity tax credit and Lifetime learning tax credit, but I believe those would also be phased out at incomes frequently discussed on this board as well. They also tend to be less relevant for people who use savings plans like 529s, but I'm not 100% sure of the details.

Anonymous wrote:

Anonymous wrote:OP, stop whining. The mortgage interest deduction is a HUGE benefit for people in the middle and upper classes. In fact, your more expensive home in a good school district gets more tax breaks.

It's actually not because of the limit and then itemized deductions get phased out above a certain income. You needn't worry your envious little head, the "rich" are getting screwed really well.

We're subject to the AMT too. The difference between you and me is that I don't whine about it. I support a progressive income tax.

I can hardly believe it, but I think you must be arguing that you don't get ANY benefit from mortgage interest deductions because of the cap at $1M. But you can't be arguing that, can you, because that would be silly. The thing is, those mortgage deductions, capped as they are, are still worth way, way more than any tax break you might conceivably get on $35k/year in private school tuition payments. Unless you think you deserve some kind of tax break that exceeds $35M, so that the government is basically paying you to send your kid to private school....

Calling me "envious" is beneath you and doesn't win any points for you.