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When her clients get hit with the [tag]alternative minimum tax[/tag], [tag]St. Petersburg[/tag] [tag]CPA[/tag] Celia Hall says some of them respond: “I don’t want that alternative.” Unfortunately for them, the [tag]AMT[/tag] isn’t optional. If your income tax calculated under the AMT is higher than the tax calculated the regular way, you pay the AMT amount. More than 3-million people paid the tax last tax year and an additional 15-million would have been affected in 2006 if Congress hadn’t stepped in this month to save their wallets. |
The underlying problem is that taxpayers’ incomes have risen more than the AMT exemption – the AMT version of the standard deduction. As a result, the AMT snares more people every year. For 2006, anyone with income higher than that exemption – $42,500 single or $62,550 (married filing jointly) – becomes a potential AMT candidate.When calculating tax under AMT, you lose [tag]personal exemptions[/tag] and certain[tag] itemized deductions[/tag], including those for taxes and medical expenses. [tag]Floridians[/tag] are less affected than residents of most states because they don’t have a state income tax to deduct on their federal returns.