Many folks have asked us lately, “What is the AMT (altertnative Minimum Tax)?”
Congress created the AMT to ensure that wealthier taxpayers, who often have the kinds of income and deductions that qualify for preferential tax treatment, would pay at least a minimum amount of tax. Congress also wrote exemptions into the law, so that middle-income taxpayers wouldn’t be subject to the AMT.
Unfortunat…ely, these exemptions were not indexed for inflation. As incomes have continued to rise, more and more people have found that they need to calculate their tax bill twice — once under regular tax rules, and again under the AMT.
Though Congress has expressed a desire to eliminate the AMT, it is still in effect. Every year thousands of middle-income taxpayers find themselves subject to the alternative minimum tax.
Don’t be one of those folks who forgets the AMT in their tax planning. For additional details or planning assistance, contact our office.
Written by: Doug Rodrigues