Alternative Minimum Tax May Be Sneaking Up On You!
The Alternative Minimum Tax applied to 19,000 returns in 1970 and continues to grow each year. In 2003 it was applied to 2.4 million income tax returns. In 2006 it is expected to affect 3.8 million tax returns, and will grow to 35 million by 2009! It may affect you if you are married and made $65,000 this year or are single and made $42,000.
You may have to figure your tax based on the regular tax formulas and the Alternative Minimum Tax, then paying whichever is higher. The Alternative Minimum Tax is a flat tax with 26 and 28% brackets. It is not adjusted for inflation, so as income levels increase it captures more and more people. This tax formula focuses on dependent exemptions, medical deductions and state and local tax refunds. Many will be disallowed or reduced. Investments with high interest income, municipal bonds and stock options will be targeted as well.
The new democratic congress has identified he Alternative Minimum Tax as a primary focus for the new years work. Specifically Senators Max Barcus, Charles Grassely and Representatives Charles Rangel and Steny Hoyer. You may want to check into their progress and contact them about your concerns.
Unfortunately those who this tax was aimed at, the truly wealthy may not be affected much, but you and I, the middle income tax bracket may get tapped and have to pay the price. It is estimated that by 2010 one half of those in the $75,000 to $100,000 and 87% of those married with two children may be hit with this increased tax. Now is a good time to look at your tax obligation and see if you can take steps to reduce your chances of being affected by it. Fortunately good tax consultants and many on-line tax estimators can help you in this endeavor. Good Luck!
Related Tags: tax, alternative, minumum
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