2006 Tax Credit - 2006 AMT trap - Page 2 - GreenHybrid

highroute · #11 (**permalink**) 05-17-2006, 11:00 AM

Quote:

Originally Posted by dgkenney

The AMT imposes a higher bill on taxpayers than the regular tax code.

Incorrect. The AMT is an alternate, parallel tax system. Every taxpayer can calculate his/her income tax using both the standard tax system and the AMT, and must pay the higher of the two tax results. For most taxpayers, especially those with low incomes, the AMT would impose a lower bill.

kenny · #12 (**permalink**) 05-17-2006, 11:07 AM

AMT is for people who make a lot of money. (Of course they don't think they do, nobody does.)

If you make too little you don't have to pay it.
I wish I had to pay it.

dgkenney · #13 (**permalink**) 05-17-2006, 12:37 PM

Quote:

Originally Posted by highroute

Incorrect. The AMT is an alternate, parallel tax system. Every taxpayer can calculate his/her income tax using both the standard tax system and the AMT, and must pay the higher of the two tax results. For most taxpayers, especially those with low incomes, the AMT would impose a lower bill.

Not my words but from CNN Money:

http://money.cnn.com/2006/05/16/pf/t..._you/index.htm

But since it says "taxpayers" as opposed to individuals, the AMT does in fact impose a higher tax bill than the tax code.

Dan

JayTea · #14 (**permalink**) 05-16-2007, 01:53 PM

Quote:

Originally Posted by sweetbeet

OK, I admit I'm being lazy, but could someone briefly summarize for me what triggers the AMT? I thought it was things like passive income and tax shelters, so I've never worried about it. Is it the total amount of itemized deductions that is relevant? or what?

Please complete the following: "You should consider whether you might have to pay the AMT if __________________________".

I'll look it up on TurboTax tonight, but if someone has a good brief answer (hahaha - from the tax code!!!!), that'd be great for a lazy person like me (and all the other lazy souls out there who are now wondering, geez, will *I* have to pay the AMT because I bought a hybrid?).

> If you have a high mortgage payment (& deduction) typical of a California home
> If you live in a high-tax state such as California
> If you have high property taxes
> If you exercised incentive stock options
> If you have significant long term capital gains
> If you make large contributions to charity (and claim on deduction)
> If you have a high amount of deductions/exemptions (including children)

"It's not about how much you earn, but to make sure no one has so many deductions and credits he/she doesn't pay some tax." You're not taxed more, just that more of your income is taxed.

JayTea · #15 (**permalink**) 05-16-2007, 02:07 PM

Quote:

Originally Posted by dgkenney

Not my words but from CNN Money:

http://money.cnn.com/2006/05/16/pf/t..._you/index.htm

But since it says "taxpayers" as opposed to individuals, the AMT does in fact impose a higher tax bill than the tax code.

Dan

AMT calculations are typically 26-28% so if you are in a high bracket but have no deductions, you'd pay up to 35% (standard) vs. the lower AMT amount.

tanstaafl14 · #16 (**permalink**) 05-18-2007, 10:31 AM

Quote:

Originally Posted by kenny

AMT is for people who make a lot of money.

Wrong. That used to be true, but because the AMT has never been indexed for inflation, it's screwing more and more of the middle class every year.