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Alternative Minimum Tax May Be Sneaking
Up On You!
Are you aware that the IRS is waiting
to snare you and grab more of your money? As a middle income tax payer,
I was not aware that the government is just waiting for me to increase
my annual income so they can skim more off the top. The alternative
minimum tax was originally designed to affect the wealthy, who have
often not paid their fair share of taxes because of allowed deductions
and other ways of avoiding their tax obligation. But it is now starting
to affect more and more middle income Americans.
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 2008 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!
You can use the
Free Tax Estimator provided by Turbo Tax Online to see how the Alternative Minimum Tax affects you.
Use Turbotax to
Prepare & File Your Taxes Online and pay the least amount of tax
possible! |
