In the Congressional tax mess we are currently living though, Alternative Minimum Tax (AMT) seems to be forgotten. There is plenty of media coverage about the Bush tax cuts being (or not being ) extended and the Estate Tax but AMT is actually the more pressing problem. For 2010, we have an estate tax and we have the lower tax rates of the Bush tax cuts but we don't have protection for 21 million taxpayers against AMT. 21 million are the number of taxpayers who didn't pay AMT in 2009 but will in 2010 unless Congress does something constructive.
Three years ago I wrote a post called "A Nasty Tax Surprise" about the lack of Congressional action on AMT. This year the problem is the same only worse. In the 2007 article, I mentioned a family of six with $70,000 income. If AMT had not been fixed, they would have paid $1444 more in 2007 tax because of AMT. If nothing is done this year, they same family and income will pay $1829 in AMT on top of their regular tax. That family will only need $54,000 in income before they will see AMT ($69).
The IRS is ready to go. They are assuming Congress will do their job and patch AMT before they go home for Christmas. If Congress doesn't at least fix this, tax season may be delayed while the IRS takes out the AMT patch we've all been promised for months. While I hope they take care of the AMT, tax extenders and the Estate tax, I will settle for an AMT patch. Think of it as my Christmas present from Congress.
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I don't now if it's bragging or complaining, but AMT nails us. When I enter property tax to my return, my tax bill doesn't drop, AMT kicks right in. My 15% cap gain rate doesn't exist, a dollar gain is 22.5 cents more tax.
Posted by: JoeTaxpayerBlog | December 10, 2010 at 05:55 PM
Just found this blog: enjoying the detailed news, stats, and information. I'll be back to read more.
Posted by: IRS Hitman | December 13, 2010 at 06:10 PM
BRAVA! Good post! The AMT is a boondoggle who's primary function seems to be allowing the feds to engage in creative accounting.
Don't count on lawmakers, though. Despite the conservative rhetoric that swept the last election cycle it looks like both parties are eager to dive right back into borrow-and-spend voodoo economics.
Posted by: Accounting Website Guy | December 14, 2010 at 08:56 PM