In theory the AMT isn't a rotten thing, it keeps the rich from getting off too cheaply, but it definitely needs to be adjusted. I am hoping there aren't any surprises for me and I get the full credit when I fill out my taxes. I have not been under AMT so far so I don't expect it this time... now if I can just get over the improvements they made to the 2009 Escape Hybrid model... still love my 2008...

 

I missed the AMT. From the looks of things, it goes like this for most people:

Take your taxable income 1040 line 43, add back the exemptions you took on the front of the form (self, spouse, kids), then add back the total of taxes deducted on schedule A in the "taxes you paid" section. If that figure is over about $44000 for a single or $66000 for a couple filing jointly, you're at risk.

I'm surprised how close I was. I earn less than $55k per year, and write off less than $3000 in total (income + property) taxes. If it wasn't for the changes that SilentAltima described, I would have probably been another unhappy AMT customer. Of course a larger income is a factor. But also it appears that those taking large exemptions (i.e. children) and/or residing in states with higher taxes (property and/or income) are at a disadvantage.

 

Not really. You know that the Alternative Minimum Tax will "kick in" if you take too many deductions for housing, mortgage, children, or whatever.

The U.S. Congress tells you this straight-forward and up-front. There's no baiting since you are aware of the AMT's existence prior to purchase, and that you may not be able to use any deductions/credits if you take too many of them.

P.S.

I wish I was rich. I'm not anywhere near the AMT line.

 

Around here the salesfolk don't discuss the rebate at all and it isn't used in advertising. Thus they can't be accused of deceptive advertising.

In any case, it wouldn't be "bait and switch". That would be if they advertised a low price for the car, and when you got to the dealer you found that the car wasn't available or was undesirable for some reason, but they did happen to have another one at a substantially higher price.

 

While this may be true, they wouldn't be paying their fair share if there was no AMT. Lets be honest if you have enough deductions to qualify for the AMT you aren't poor.

Its not really the people's fault that are subject to the AMT though its really the unfairness of the tax code. Why should you get deductions for your mortgage interest, for having more kids or pay less on your capital gains?

Without the AMT though there would be far more people living pretty well paying zero or almost no income tax. That isn't going to sit well with the majority of voters who earn less and never need to worry about the AMT.

 

OK, I think I found an angle.

In Massachusetts, you can do a car sale between relatives without paying sales tax. What if I have my parents buy the car, and then buy it from them a few weeks later? They can send me their tax rebate when it comes, and I'll buy them a dinner. Thoughts?

 

Cool idea if you live in a no-sales-tax state.

It's a problem if you're subject to sales tax. The parents would pay sales tax when they bought it from the dealer, then you'd have to pay it again when you bought it from them.

Before anyone suggests "put $1000.00 on the bill of sale" be warned that it's fraud, and besides it's been tried and usually doesn't work. The gift transaction is a sale-equivalent and usually subject to tax, but that varies by state. Here in Colorado, the clerks have car value guides and if they suspect money changed hands (like a newer, undamaged car selling cheap) they advise you that they are charging you sales tax on the book value. If you put up a fuss, they freeze the transaction and investigate for fraud.

 

Mass allows this without extra sales tax (http://www.mass.gov/Ador/docs/dor/Fo...DFs/mvu_26.pdf)

Any rulings on how long that you have to hold onto car to prove that it is not purchased for resale?

 

That's a pretty skewed definition of "fair". The top 1% of income earners (AGI > ~$365,000) pay as much tax as the bottom 95% of income earners, and repealing the AMT wouldn't change that by much. Over 40 million of the 130 million tax filers paid no tax or got money back without paying anything via credits.

I disagree. When the AMT was first passed in 1969, their were less than 200 taxpayers that qualified. That was before various tax acts (e.g. 1986) closed loopholes or phased out deductions.

I think the market is doing exactly what the hybrid incentives were meant to do, but as long as the incentives are there and we're driving behavior via tax policy, the credits should apply for the significant number of people covered by the AMT. After all, the objective was to get more people to buy a hybrid, right? If the objective is to only have the bottom 2/3 of income earners driving fuel efficient cars, then by all means let the AMT wipe out the hybrid credit.

 

I call BS here. Show me that stat. From what I've read at the Congressional Budget Office, which is non-partisan, its more like the top 1% pay 28% of all income taxes.

http://www.factcheck.org/askfactchec...s_the_top.html


I don't think the intent was to help consumers with this credit but rather to help manufacturers move vehicles to recover some of their cost of development. If the incentive applied to only 2/3 the potential market then that would be enough to have the intended effect. Fair? Not quite, but is anything in the tax code?