Alternative Minimum Tax Fails To Hit The Wealthy With Any Real Impact By: George Bauernfeind | - Everyone knows the history of the Alternative Minimum Tax its intended purpose was to ensure that the wealthy were paying at least something like what today is called their fair share of taxes. But as everyone also knows, its real impact has landed on the masses who are far from finding themselves in this wealthy category. How the AMT has failed in its purpose is easily seen by looking at the income tax return of someone who really can be considered rich.
Irs Statistics Show The Alternative Minimum Tax Decreasing "" What Gives? By: George Bauernfeind | - Periodically the IRS publishes what it calls its Statistics of Income Bulletin. This document reports data that has been compiled from all of the tax returns filed for the previous year, including data on the Alternative Minimum Tax. This years report shows that, for the first time after six straight years of the AMT increasing, the amount of AMT paid and the number of taxpayers paying it decreased from the previous year. Are we finally seeing some needed relief from this burden? Hardly; ... Tags:amt, alternative minimum tax, form 6251, tax planning
Year-end Tax Extenders "" Where"s The Patch? By: George Bauernfeind | - Every year at about this time Congress starts thinking about what tax laws will expire on December 31, and what it really needs to be doing about these. Of the 65 various tax provisions that will expire, one of the big ones is the annual Patch for the Alternative Minimum Tax. Without the Patch, nearly 30 million new taxpayers will wake up on New Years Day with a lot more than the usual hangover, and the 4 million already in the AMT had better get their checkbooks out for the additiona ... Tags:amt, alternative minimum tax, form 6251, tax calculator, tax
Irs Releases 2011 Version Of Form 6251 - Time To Start Thinking About Year-end Tax Planning By: George Bauernfeind | - The IRS recently released its 2011 version of the Form 6251 Alternative Minimum Tax Individuals. With year-end only a few months away, this serves as a timely reminder that anyone stuck in the AMT needs to start thinking about the ways they can reduce this burden. The most effective AMT planning strategies must be implemented by December 31 in order to have any impact on the current years taxes. This article provides a general overview of some of the more important of these plannin ... Tags:alternative minimum tax, amt, Form 6251, tax calculator, tax planning, tax strategies
Who Can Benefit From The Alternative Minimum Tax Credit? By: George Bauernfeind | - With few exceptions, when the Alternative Minimum Tax is paid it is money out the door - gone forever. No surprise here since this is the way taxes work. What is a surprise to many folks, however, is that a portion of the AMT paid in one year may instead simply be a prepayment of taxes referred to as a credit - that may be available as a refund in a future year. Understanding which AMT items generate this future credit and which dont can result in additional tax savings. Tags:alternative minimum tax, amt, Form 6251, tax calculator, tax planning, tax strategies
Incorporate Your Small Business And Avoid The Alternative Minimum Tax By: George Bauernfeind | - The Alternative Minimum Tax applies both to corporations as well as to individuals. While many of the AMT rules are the same, there are some significant differences between the two. One of the more significant of these differences is a provision that totally exempts Small Business Corporations from the AMT. This can present real tax savings opportunities for individuals who are paying the Alternative Minimum Tax because of their business activities.
Double The Worry! - State Alternative Minimum Tax By: George Bauernfeind | - A number of states have their own version of an Alternative Minimum Tax one that is imposed at the state level, separate and distinct from the Federal Alternative Minimum Tax. While a state AMT certainly adds to the burden of those subject to the Federal Alternative Minimum Tax, the proper implementation of tax planning opportunities in these situations can result in a double benefit to the taxpayer.
Tax Court Denies Challenge To The Alternative Minimum Tax, Revealing Costly Amt Taxpayer Errors By: George Bauernfeind | - On occasion a frustrated taxpayer will go to Tax Court in an attempt to convince a judge that the Alternative Minimum Tax was never intended to apply to them. As in the case of Fritz v. Commissioner, however, no sympathy is ever found there - if the calculations are done correctly the Court simply confirms that the tax is owed. The facts in these cases present interesting lessons, however, because they reveal both the terrible feeling of frustration when getting blindsided by the AMT as well a ... Tags:amt, alternative minimum tax, form 6251, tax calculator,
Exercising Employee Stock Options "" Beware Of The Alternative Minimum Tax By: George Bauernfeind | - With the stock market having nearly doubled over the past two years, many individuals holding stock options that they received from their employers are giving serious consideration to cashing out the value in these options. This article discusses the two principal types of options and explains the different AMT issues associated with each.
Before You Start Your Precor Amt Workout By: michael dg martinez | - Each year lots of individuals make the very same New Year's Resolution. Every year these people guarantee "I will get healthy this year." "This will be the year I'll get in shape" they say ever year. Of course, both these things take loads of work. If these are your resolutions theres no doubt that youve witout a doubt read plenty of articles that say the same thing. Good food and good exercise are necessary if you really want to get healthy. Undoubtedly there ought to be something differe ... Tags:precor amt 100i, Precor AMT 100i Adaptive Motion Trainer, b
I Am Retired "" Does The Amt Apply To Me? By: George Bauernfeind | - Of all the different types of AMT taxpayers, retirees typically are the most surprised when they find themselves stuck in the Alternative Minimum Tax. Unfortunately, there is no age exemption for the AMT an individual could reach 100 and still be paying it, depending on that persons level and types of income and tax deductions. In certain cases, the AMT may even hit a retiree harder than a person still working. With a little understanding of the issues and some advance planning, ... Tags:amt, alternative minimum tax, form 6251, tax calculator
I Am An Investor "" Does The Amt Apply To Me? By: George Bauernfeind | - Every taxpayer with an investment portfolio of any size definitely needs to be concerned about the Alternative Minimum Tax. Certain types of investments, and the income earned on those investments, are likely to trigger the AMT. Most investors also have expenses associated with managing these portfolios, and certain of these expenses also can have an AMT impact.
I Own And Operate A Small Business "" Does The Amt Apply To Me? By: George Bauernfeind | - Among the many paperwork burdens small business owners must endure is the filing and paying of income taxes for the business. Even if no taxes currently are due because of losses, accurately computing and tracking of tax losses is a must. And, as if the Regular Tax werent enough to contend with, the Alternative Minimum Tax also must be considered. The purpose of this article is to discuss those specific aspects of the AMT that can apply to small business owners.
A Hidden Killer: The Amt Exemption Phaseout By: George Bauernfeind | - In computing the Alternative Minimum Tax, a taxpayer is allowed a certain exemption amount, similar in concept to the standard deduction and personal exemptions allowed in calculating the Regular Tax. A surprise that hits a lot of AMT payers, however, is that this exemption amount is gradually phased out as a taxpayers income increases. This hidden killer phaseout is one of the primary reasons folks get caught in the AMT.
Last-minute Amt Calculations And Planning By: George Bauernfeind | - The last-minute tax relief bill signed just a few weeks ago may have saved many from being pulled into the Alternative Minimum Tax for the first time, but what about the four million individual taxpayers already stuck there? Not even a thank-you from Congress or the President for the billions of dollars paid each year in AMT by these folks, much less any relief being planned - our countrys spending habits are just too great. But, while there is no way to make it just go away, there ce ... Tags:amt, alternative minimum tax, tax planning, amt patch, form 6251
Amt "patched" Once Again "" This Year"s Fix Also Includes 2011 By: George Bauernfeind | - A last-ditch effort on the part of liberal Democrats in the House to send the big tax cut extension bill back to the Senate has failed. With last nights favorable vote, an AMT Patch for 2010 and 2011 has now been passed by Congress, included as a part of The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The bill now goes to President Obama, who is expected to sign it into law as soon as he receives it.
Significant Progress Being Made On The Amt Patch By: George Bauernfeind | - The good news weve been reading this week is that the desperately-needed Alternative Minimum Tax patch has now been included in the same bill as the extension of the so-called Bush tax cuts. Congress is anxious to adjourn and get home for Christmas, and the last remaining pockets of resistance are lame-duck House Speaker Nancy Pelosi and the more liberal Democrats. But even these folks currently are being courted with some special tax breaks that they can take home to their constituents, so ... Tags:amt, alternative minimum tax, amt patch, tax calculator
Irs Assumes Amt Patch Even Before Congress Changes The Law By: George Bauernfeind | - In unprecedented action, the IRS has jumped the gun and changed its Alternative Minimum Tax form Form 6251 to reflect the current estimate of what the AMT exemption amount would be if and when Congress enacts this years AMT patch.
Individual taxpayers should proceed with some caution at this point, however, until the law actually is changed. While it is expected that the current logjam between the Republicans and Democrats on these tax issues will break sometime soon, t ... Tags:amt, alternative minimum tax, tax planning, amt patch, form 6251
Congress Reveals Its Thinking On The Amt Patch By: George Bauernfeind | - In a letter sent to IRS Commissioner Doug Schulman by the leadership of the tax-writing committees of both houses of Congress, these individuals have revealed their specific plans for the Alternative Minimum Tax patch for 2010. This November 9 letter was written in response to a November 5 letter sent to them by Commissioner Schulman in which he warned them of delays in the 2011 filing season (processing of 2010 tax returns) if action is not taken soon. This Congressional letter allows taxpaye ... Tags:amt, alternative minimum tax, tax planning, amt patch, 6251
A Lame-duck Congress And The Amt Patch By: George Bauernfeind | - The year is rapidly drawing to a close, and Congress has not yet addressed the Alternative Minimum Tax patch. This so-called patch is the adjustment that needs to be made to the AMT exemption amount to prevent 26 million new taxpayers from falling into the Alternative Minimum Trap this year, as well as to prevent each of the 4 million already stuck there from paying thousands more in AMT dollars. With the Republican Partys success in the recent election, will the lame-duck Congr ... Tags:amt, alternative minimum tax, tax planning, amt patch, 6251
Real Estate And The Amt: Rental Or Investment Property By: George Bauernfeind | - The Alternative Minimum Tax is a very important consideration for taxpayers who own real estate because just about every tax rule applying to real estate is different for the AMT than it is for the Regular Tax. This article on Real Estate and the AMT will address those situations where the individual holds the real estate as an investment, typically as rental property. The differences in tax treatment between the Regular Tax and the AMT can be significant.
Real Estate And The Amt: Home Ownership By: George Bauernfeind | - The Alternative Minimum Tax is a very important consideration for taxpayers who own real estate because just about every tax rule applying to real estate is different for the AMT than it is for the Regular Tax. This second part of our four-part series on Real Estate and the AMT will address the most common form of real estate ownership - the taxpayer's personal residence. Typically this is a taxpayer's largest purchase, and the differences in tax treatment between the Regular Tax and the AMT c ... Tags:amt, alternative minimum tax, tax planning, real estate,
Real Estate And The Amt: Overview By: George Bauernfeind | - The Alternative Minimum Tax is a very important consideration for taxpayers who own real estate, because many of the rules that apply to real estate are different for the AMT than they are for the Regular Tax. This article is the first of a four-part series on Real Estate and the AMT. We'll start with an overview of the differences in the rules, and then will drill down into the details in the three different situations taxpayers find themselves when they own real estate: 1) the taxpayers r ... Tags:amt, alternative minimum tax, tax planning, tax expert, financial planning, tax return, irs, tax help
Amt Case Study: Vice President Biden"s 2009 Tax Return By: George Bauernfeind | - As has become customary, the President and the Vice President have released their recently-filed tax returns. You can find these tax returns on the White House blog by doing a search for "tax returns." An interesting thing to note is that Vice President Biden remains stuck in the Alternative Minimum Tax, as he has been for at least the past several years.
Calculation Of The Alternative Minimum Tax - Property Taxes By: George Bauernfeind | - Similar to state income taxes, for Regular Tax purposes you are allowed a deduction for property taxes that you pay. Under the AMT, however, you are allowed no deduction for property taxes. This problem affects more than 90 percent of all folks stuck in the Alternative Minimum Tax, so it is something that you definitely need to look at.
Calculation Of The Amt - State And Local Income Taxes By: George Bauernfeind | - Every state with an income tax requires that you pay the tax throughout the year, just as the IRS does. This is done either through withholding from your paycheck - if you are an employee - or through quarterly estimated payments if you are self-employed, retired, or you are an employee but have not increased your withholding to cover the taxes you will owe on your investment income.
Impact Of Itemized Deductions On The Alternative Minimum Tax By: George Bauernfeind | - In previous articles we talked about the different tax brackets for the Alternative Minimum Tax and the Regular Tax, and the AMT exemption and how its phase-out throws a lot of people into the AMT. This was a review of the income side of the AMT calculation - i.e., how a taxpayer's income level can act like a vortex pulling him into the AMT. Now we are shifting gears and addressing the deduction side of the calculation.
Taxable Income, Tax Brackets, And The Amt Exemption - Part Ii By: George Bauernfeind | - In Part I, we discussed the different tax brackets for the Regular Tax and for the Alternative Minimum Tax, as well as the AMT exemption. For 2009 for married couples filing jointly (MFJ) the AMT exemption was $70,950. In this article we will discuss the phase-out, or loss, of the exemption as taxable income exceeds a certain threshold level. For MFJ, this taxable income threshold is $150,000. The Form 6251 also has the thresholds for the other filing statuses, found at the IRS website. ... Tags:amt, alternative minimum tax, tax planning, tax expert, financial planning, tax return, irs, tax help
Taxable Income, Tax Brackets, And The Amt Exemption By: George Bauernfeind | - In Part I, we discussed the different tax brackets for the Regular Tax and for the Alternative Minimum Tax, as well as the AMT exemption. For 2009 for married couples filing jointly (MFJ) the AMT exemption was $70,950. In this article we will discuss the phase-out, or loss, of the exemption as taxable income exceeds a certain threshold level. For MFJ, this taxable income threshold is $150,000. The Form 6251 also has the thresholds for the other filing statuses, found at the IRS website. ... Tags:amt, alternative minimum tax, tax planning, tax expert, financial planning, tax return, irs, tax help
How Can I Get Out Of The Amt This Year? By: George Bauernfeind | - So the Alternative Minimum Tax bug bit you again in 2009. You sit there looking at your tax return trying to figure it out. Is there a way to avoid the AMT, or are you stuck in it for life? The calculations are confusing, yet there are some basic themes underlying all of it that seem to be pushing certain taxpayers into the AMT. What are these themes, and is there a way to understand how they, and the accompanying calculations, actually work?
Connecticut Taxpayers Need To Be Prepared For Amt (a Mean Tax) By: Theodore Lanzaro | -
Some Connecticut taxpayers may be in for big surprise this year. The Alternative Minimum Tax (AMT) is set to affect even more taxpayers in 2006. Most individuals do not realize that there are actually two tax systems: regular income tax and alternative minimum tax. When their tax returns are prepared, the tax due under each system must be compared and the higher of the two taxes paid.
Top 10 Traps Set By The Amt By: George Bauernfeind | - Of the nearly 30 different items that can cause taxpayers to fall into the AMT, a few are much more common than others. Here is a quick look at the top ten list of those that snare the most Alternative Minimum Taxpayers.
# 1 Personal exemptions
For the Regular Tax, every taxpayer is entitled to a personal exemption deduction for himself, and his spouse and/or other dependents. Since the AMT denies any deduction for personal exemptions, this is the single item affec ... Tags:amt, alternative minimum tax, tax planning, tax expert, fina
The Amt Requires Additional Analysis With Respect To Standard Vs Itemized Deduction By: George Bauernfeind | - A common question that arises at tax time is whether to itemize or take the standard deduction. For individuals paying the Regular Tax the decision is easy, but when the AMT is involved there is one extra step that needs to be taken. As will be seen in the example below, this step can save the taxpayer thousands in AMT dollars.
Who Has To File The Form 6251? By: George Bauernfeind | - A common question that is asked is who has to file the IRS Form 6251, Alternative Minimum Tax - Individuals. The answer seemingly is simple those who have to file the Form 6251 are those who owe the Alternative Minimum Tax. If a taxpayer does not owe the AMT, the 6251 does not need to be attached to the Form 1040. But how does a taxpayer know if he owes the AMT? There are several different ways to approach this; these are discussed below.
Alternative Minimum Tax Impact From Investing Activities By: George Bauernfeind | - Income that is earned from investments is a significant factor in the amount of Alternative Minimum Tax an individual pays. Certain types of investment income (dividends, capital gains, certain interest, e.g.) as well as the amount of this income in relation to the taxpayer's other income, all factor into the AMT formula. A taxpayer usually has much more control over investment income than he does his salary, for example, making this source of income much more important from an Alternative Min ... Tags:amt, alternative minimum tax, tax planning, tax expert, financial planning, tax return, irs, tax help
The Estate Tax And The Amt "" An Urgent Concern For Taxpayers By: George Bauernfeind | - As we sit today, we do not have an estate tax in 2010. The problem this presents is that, through an interplay of the estate tax rules and the Alternative Minimum Tax rules, if Congress does not act to reinstate the estate tax for 2010 there will be a significant increase in the number of individuals paying the AMT, not only in 2010 but in all future years as well.
The Alternative Minimum Tax: Basics Of What You Need To Know By: George Bauernfeind | - The Alternative Minimum Tax often is described as a separate tax system or a parallel tax system, separate and distinct from the regular tax system that applies to everyone. While the AMT creates a unique fraternity with a membership of over four million out of a total taxpayer population of over 150 million, there really is only one tax system in the U.S.
Our tax system is complicated, but the underlying concept is basic:
Alternative Minimum Tax And Passive Activities By: George Bauernfeind | - One of every seven taxpayers subject to the Alternative Minimum Tax is paying it, at least in part, because of what is known in the tax law as a passive activity. A passive activity is the tax characterization of a certain type of investment, and it may be possible for a taxpayer to reduce his AMT by paying attention to the investments in his portfolio that are triggering this item.
Alternative Minimum Tax - Medical And Dental Expenses By: George Bauernfeind | - The itemized deduction for medical and dental expenses is an item that affects a significant number of individuals who are stuck in the Alternative Minimum Tax. Depending on the type of health insurance an individual has (high deductible plan with a Health Savings Account versus a high amount of coverage with a small copay), and the type of expense incurred (elective procedures versus immediate medical needs), there may be some fairly easy opportunities for AMT savings. The key to this is in t ... Tags:amt, alternative minimum tax, tax planning, tax expert, financial planning, tax return, irs, tax help
Amt & Disposition Of Business Or Rental Property By: George Bauernfeind | - In our last article we talked about the Alternative Minimum Tax item resulting from depreciation of business or rental property. A direct corollary of that issue is the AMT item that results from any subsequent sale or other disposition of such property. Critical to minimizing a taxpayers AMT is an understanding of the relationship between these two items.
Alternative Minimum Tax Planning Ideas...depreciation By: George Bauernfeind | - Surprisingly, one of every six individuals paying the Alternative Minimum Tax has depreciation as an AMT item. It may or may not individually be a large item to a particular taxpayer, but the good news is that it is easy to plan around, and this planning can be done any time up until the filing of the tax return. In other words, a taxpayer with this item still may have the opportunity to reduce his AMT for 2009.
Alternative Minimum Tax (amt) Part 2 - What You Can Do To Reduce Its Impact On You And Your Taxes By: Thomas Quinlin | -
Did your tax bill go up dramatically this year, courtesy of the alternative minimum tax (AMT)? You're not alone. Every year, this happens to more and more people. That's because the single exemption allowed in the AMT has not kept pace with inflation. Read on for some things you can do to reduce the negative effects of this tax for next year's tax bill.
Alternative Minimum Tax (amt) Part 1 - What Is It And Could It Affect How Much You Pay In Taxes? By: Thomas Quinlin | - Are you affected by the alternative minimum tax? Or worried you might be? You have reason to be concerned. Few of the government's changes to the tax system have had a more adverse effect or have caused as much anger and frustration as the alternative minimum tax (AMT). But you don't have to be at its mercy. Read on for a few action steps you can take to reduce your chances of getting caught in the AMT net.
Alternative Minimum Tax Planning Ideas...year-end Amt Planning Wrap-up - Part 2 By: George Bauernfeind | - The AMT items that were talked about in Part 1 of this wrap-up generally were the bigger ones that can, depending on a taxpayers situation, present immediate year-end Alternative Minimum Tax savings opportunities. But the other items that were discussed in this 10-week series also are important in making sure the least amount of AMT is paid. Here is a brief recap of these other items, with references to the amtblog.com articles in which each appeared.
Alternative Minimum Tax Planning Ideas...year-end Amt Planning Wrap-up - Part 1 By: George Bauernfeind | - In our 10-week series of articles on tax planning for the Alternative Minimum Tax, we have looked at many things a taxpayer can do to reduce his AMT liability. With only four days left in which to act in order to reduce 2009s taxes, here is a summary of these items, with reference to the date each article appeared on amtblog.com. Please refer back to the article for the specific tax-saving steps that still may be taken before year end.
Amt Planning Ideas...incentive Stock Options (isos) - Part 2 By: George Bauernfeind | - An individual holding an Incentive Stock Option to acquire his employer's stock, and considering taking advantage of this fall's run-up in the price of that stock, needs to be planning for the potential Alternative Minimum Tax impact. Time is important - Dec. 31 is fast approaching, and after that it is too late to do any AMT planning for a 2009 ISO exercise.
Amt Planning Ideas...incentive Stock Options (isos) - Part 1 By: George Bauernfeind | - There are many different ways an employer can award an employee with equity, or stock ownership, in the company. Briefly explained below are the ones commonly used for this purpose. Critical to planning for the Alternative Minimum Tax, the employee must first know exactly what form of equity he holds, because only one has direct AMT implications.
Limitation On Itemized Deductions "" Amt Adjustment By: George Bauernfeind | - Depending on a taxpayers level of Adjusted Gross Income (AGI), the total amount of all the itemized deductions shown on Schedule A of the Form 1040 may not be deductible for Regular Tax purposes a reduction may apply. For 2009, this AGI level is $166,800 for all taxpayers other than those with the Married Filing Separately status, in which case it is half, or $83,400.
State Income Tax Refunds - Amt Adjustment By: George Bauernfeind | - The AMT adjustment for State Income Tax Refunds, line 8 on Form 6251, is a reduction to your Alternative Minimum Taxable income. There isnt much a taxpayer can do about this other than to understand just a little bit of what is going on.
Just for fun, lets start with the IRS explanation for this in the instructions to Form 6251:
Corporations Failing To Claim Amt Exemption Overpay Taxes By $11,000 By: Richard A. Chapo | - Does your incorporated business pay alternative minimum tax [AMT]? If so, there is a 93 percent chance you have been overpaying your taxes by an average of $11,000 a year according to the Treasury Inspector General.
The Office of the Treasury Inspector General for Tax Administration was created in 1999 to oversee the IRS. One of the duties of the Treasury Inspector General is to study and report the efficiency of the tax payment system, particularly the accuracy of tax collection ... Tags:amt, alternative minimum tax, corporations, tax, taxes, corporate, irs, overpay
