While regular tax brackets have been adjusted for inflation over the years, the Alternative Minimum Tax has not. That is why individuals with moderate incomes are likely candidates. If you’re income is over $75,000, you are considered to be AMT candidate. What makes you vulnerable are a large number of deductions that can include: several children, interest deductions from a second mortgage, capital gains, high state and local taxes, and ISO’s (Incentive Stock Options).
When first introduced in 1969, the Alternative Minimum Tax (AMT) was widely acknowledged to be a “rich man’s tax” — a fallback tax for those wily taxpayers with big incomes and numerous deductibles. But because the AMT has been adjusted for inflation only twice in 30 years, it is now encroaching upon the middle class.
Computing your AMT can be a complex process. But having a general understanding can be a great help. […]
