The last-minute tax relief bill signed just a couple of weeks ago may have saved from being pulled into the Alternative Minimum Tax for the very first time many, but what about the four million individual citizens already stuck there? Not even a “thank you” from Congress or the President for the billions of dollars paid annually in AMT by these people, much less any relief being planned – our countrys spending habits are simply too great. However, while there isn’t any way to make it simply go away, there surely is something these people may do about the AMT. With the help of a computerized AMT calculator, the quantity of AMT paid can be reduced. One Periodic Hand Off! 2 Lets look at some facts. Last week the IRS released its Statistics of Income Report for tax returns filed in 2009, with some staggering information on the AMT. Here is what it reveals: -The average quantity of AMT paid was $6,500. – the overall amount of AMT paid showed a substantial increase – more than six percent higher compared to prior year. -There are taxpayers at every income level from $0 of income paying the AMT. – Once income reaches $100,000, the chances pulled into the AMT become much of being greater -The income range of $200,000 to $500,000 is the ill AMT “sweet spot,” with an amazing 70% of all taxpayers in this group paying the AMT.

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So what can you do about your $6,500? Especially for those in the “sweet spot” income range, chances are most of your AMT has been triggered by the one single item found on almost 95% of all AMT payers tax returns state and local taxes. The biggest offenders in this place are state taxes on income and property taxes on ones house, with other municipal taxes, if those employ, compounding the issue and city. Here is the one that permits a full deduction for these taxes when computing the Routine Tax liability, yet refuses any deduction when computing the AMT. For example, imagine a family of four has taxable income for the Routine Tax the starting point in all AMT computations of $200,000. State income taxes and property taxes readily could amount to $20,000 worth of itemized deductions. What this implies is that taxable income with this family for the Alternative Minimum Tax would be $234,600 nearly 20 This is because this family in 2010, also to private exemptions, worth $14,600 are denied as a deduction for the AMT.

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Note that this simple example doesnt even consider the 20-plus other AMT items which could influence this taxpayer (see IRS Form 6251). With this huge a difference in taxable income, you can almost guarantee that this taxpayer will be stuck in the AMT. So what can be done? With the AMT calculator, its really fairly easy. Suppose in January or a property tax statement could be paid. Mean lowering your AMT by nearly $1,500. if you transfer a $5,000 AMT item from one year to the next, it If you could go $5,000 of state income taxes from one year to the next, now you’ve possibly $3,000vings of AMT Its that easy!