Over the past year or two I've been reading about the Alternative Minimum tax and how it will apply to more middle class taxpayers. I did some googling and still don't understand how the system works and more importantly if the wife and I will have to pay the AMT in 2006. We have good incomes, pay state/local taxes and take the mortgage interest deduction. My understanding is that after a certain income level you loose those deductions and are subject to the AMT. But I don't understand how the AMT is applied and when. If we get nailed by the AMT it might make more sense for my wife not to work and stay home.
I found this report on a congressional website and I'm still trying to make sense of it.
Present Law And Background Relating To The Individual Alternative Minimum Tax
http://www.house.gov/jct/x-37-05.pdf