More and more taxpayers are being subject to an old law that was intended to reach those who were taking advantage of accelerated tax benefits to avoid paying tax- the Alternative Minimum Tax or “AMT”. This law was never intended to effect the middle class, but because of several factors, including not indexing the tax rates for inflation since the law was enacted. Unless serious overhaul or repeal is passed (each year new legislation is proposed and this year another 1-year relief proposal has been passed), it will effect more and more of us. The IRS Taxpayer Advocate’s Office has expressed concern over the over-reaching, never-intended law for the middle class.
Here are ten items you should ask yourself to see if AMT may apply to you (at least you should consider AMT and prepare a Form 6251 for your return):
- Personal Exemptions
- Standard deduction
- State and local income, sales adn property taxes
- Mortgage interest on refinanced or second mortgages and home equity loans not used to buy, build or improve a home
- Medical Expenses
- Miscellaneous itemized deductions subject to the 2% floor
- Exercise of incentive stock options
- Long term capital gains
- Tax-exempt interest from private activity bonds
- Business tax deductions
If these factors exist or your tax situation appears complicated, you should consider consulting a tax professional in this area.