What is the AMT, Alternative Minimum Tax ?
Friday, February 5th, 2010 | Places
AMT stands for Alternative Minimum Tax. The Alternative Minimum Tax was developed in 1969 to make sure that wealthy taxpayers didn’t escape paying income taxes. The tax was meant to target high-income taxpayers who may have many deductions and can sometimes avoid paying any income taxes at all.
Will I have to pay the AMT?
You may be at risk for the AMT if you earn a high income, having more than one child, and you are married. You may not know if you will have to pay the alternative minimum tax until you prepare your return. There are a number of different items that can determine whether you will pay this tax or not.
The following are people that may have to pay the AMT:
- If you are married and earn more than $45,000
- If you are single and earn more than $33,000
- If you meet income levels and have more than one child
- If you meet income levels and are married but filing separately
- If you live in states with higher taxes such as Michigan, New York, or California
The alternative Minimum Tax has slowly lost its purpose and has started adversely affecting the middle class taxpayers. As inflation rises and this tax continues to affect a standard income level it has been moving from only wealthy individuals down to middle class families.
Over the past couple of years temporary bills (AMT Patch) have been passed to help avoid this. The AMT is a very complicated tax and you may not know if you will have to pay until you start calculating your taxes.
TurboTax online offers a free tax calculator to help you determine if you are subject to the AMT. TurboTax will help you calculate your taxes and if you do owe the AMT, how much you will have to pay.