Taxes Taxes Taxes!

[red-beard]

Have you had to pay AMT (Alternate Minimum Tax? My wife and I did the last 2 years.

[mikester]

Same here.

[Hugh R]

I've paid it the last several years. Can't wait till Charlie Rangel and his buddies get at the tax code. They've already said they won't extend the tax cuts for "The Rich". Yeah that's me and eff those that want to take even more of my money. At the end of the month, I don't have squat left over, and I live a pretty frugal life. Yeah I know I own a Porsche, but I paid not much for it, as most of you know. Less than the price of an economy Hyundai.

[livi]

Sorry Red-beard. I just had to check the third option.

[red-beard]

For those don't know...we actually have 2 tax codes in the US. The "Regular" code which we all love and know, and the AMT or Alternative Minimum Tax. In the regular system, we remove from our income many items, for example interest paid on our house and taxes paid elswhere. You take all of the deductions and credits, etc, and then calculate the tax you need to pay.

Then, you re-calculate it using the AMT formula where they take away most of the deductions. You then pay the greater of the 2.

One problem. They indexed all of the taxes rates in the regular system for inflation, so that you don't change the taxes bracket on someone who still makes the same money factoring inflation. However, they never added the indexs to AMT. The "rich" tax is now catching lots of "middle income" types.

[coloradoporsche]

Hmmm. Is there any hard and fast rule as to who will get hit with the AMT? I cringe every time I do my taxes, but so far have not been hit by the AMT.

How do I know if I'm close?

[sammyg2]

Every year.

[livi]

Good explanation, Red! (again)

Same incomprehensibly complex tax system in Sweden. And if there is anything Sweden is known for - it is our taxes and perhaps Absolut Vodka. It is an enigma to me why taxing has to be so darn complicated.

Swedish tax model:

"Congrats! Here is your monthly salary. Now you see it - now you donīt!" (tax)..

[74-911]

Originally posted by red-beard
However, they never added the indexs to AMT. The "rich" tax is now catching lots of "middle income" types.

They (congress) did the same thing when they started taxing social security income in the early 80's. The trigger amount was not indexed to inflation so what was a relatively high trigger then ($32K I believe for married filing jointly) is now hitting just about anyone who draws social security and has any income at all outside of social security. And this trigger amount includes ALL income, tax free bonds don't help at all.

[red-beard]

Originally posted by Wayne at Pelican Parts
Common misconception about AMT - 1st mortgage interest deduction still stays with the AMT calcs. I lost a bet on this once...

-Wayne

I said _most_, not all. Me? I plug all the crap into a computer program and it tells me what to pay and why.

[HardDrive]

I wouldn't say I 'pay' the AMT.

Its more like I get bent over a treated like a $2 whore by the AMT.