What is the AMT Tax?
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Affected by the Alternative Minimum Tax?
Rep. Heather Wilson wants to know how the AMT affects you and your family. Please share your thoughts and opinions with Heather by sending an email to ask.heather@mail.house.gov |
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The Alternative Minimum Tax (AMT) started in 1969 when Congress wanted to make sure the richest Americans paid at least some tax. It has a lot of problems, mostly because it was never indexed for inflation (as more Americans make more money because of inflation, more Americans become subject to it) and it’s tough to calculate. The National Taxpayer Advocate says the AMT is the “poster child for tax law complexity”. What started out as a tax on the rich has unfortunately turned into a hefty burden for the middle class.
Why are we talking about the AMT today?
A Republican Congress was successful in repealing the AMT in 1999 but President Clinton vetoed it. Ever since then, Republicans in Congress have been able to put a yearly “patch” on it, protecting middle-class taxpayers from year to year. Many of us haven’t been affected by the AMT tax, but that could change when we all file our 2007 tax returns.
There is no AMT patch in place yet for this year’s taxes.
That’s right. Usually, Congress has the tax patched by June, but the Democrats have failed to get it done. Now, they are threatening to delay the vote on the AMT until after Thanksgiving. While Congress haggles over the issue and delays fixing the problem, millions of Americans are left in uncertainty over what they will owe in taxes come Spring.
The situation could cause big problems for the IRS and for those people affected by the tax.
What does this mean for you?
First, you need to know if you’ll be affected by the AMT tax if there is no patch for 2007. About 23.2 million Americans and 96,000 New Mexicans could see an increase in their taxes this year. Could you be one of them?
Nearly one in two tax filers that make between $75,000 and $100,000 will be subject to the AMT.
The IRS has not come up with a way to officially determine the AMT tax burden for 2007 because all eyes are still on Congress in the hopes of a patch. But to get an idea of your possible burden, you can go to the IRS website and use their calculator for 2006. Keep in mind that this calculator was programmed AFTER last year's patch. If a patch is not enacted into law this year, the AMT will affect many more people than it did last year.
Private sites like Fidelity.com and Smartmoney.com offer additional information as well.
Second, if you believe you could be affected by the AMT, you need to be prepared for the possibility of a larger than normal tax bill, and a longer wait for your tax return.
Heather Wilson opposes the Democrat’s attempt to raise taxes instead of fixing the AMT, but she wants to hear from you. Please email Heather your concerns to ask.heather@mail.house.gov. |