Comments on: What is the Alternative Minimum Tax (AMT)? http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/ personal finance tips, tricks, and commentary Sat, 21 Nov 2009 22:51:28 -0500 http://wordpress.org/?v=abc hourly 1 By: Nickel http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/comment-page-1/#comment-131241 Nickel Mon, 04 May 2009 14:00:53 +0000 http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/#comment-131241 Kris: That's because you don't truly understand the AMT until you've stared it in the face and done everything within your power to avoid it. :) Kris: That’s because you don’t truly understand the AMT until you’ve stared it in the face and done everything within your power to avoid it. :)

]]> By: Kris http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/comment-page-1/#comment-131240 Kris Mon, 04 May 2009 13:38:52 +0000 http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/#comment-131240 Nickel im a accounting major in college right now and ive never seen anyone actually break down the AMT as well as you did. Nickel im a accounting major in college right now and ive never seen anyone actually break down the AMT as well as you did.

]]> By: laura http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/comment-page-1/#comment-116087 laura Sun, 23 Mar 2008 03:57:25 +0000 http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/#comment-116087 I just found the 2007 AMT Assistant on the irs.gov website. It helps you determine if you need to pay AMT. It was a BIG help to me, just make sure you have filled out your 1040 through line 44 and schedule A if needed. I just found the 2007 AMT Assistant on the irs.gov website. It helps you determine if you need to pay AMT. It was a BIG help to me, just make sure you have filled out your 1040 through line 44 and schedule A if needed.

]]> By: kitty http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/comment-page-1/#comment-114000 kitty Wed, 26 Dec 2007 17:22:39 +0000 http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/#comment-114000 The thing that annoys me most about AMT is that it hurts those of us who live in high-tax states. Why is state income and property tax deduction considered to be a loophole for the rich? Same with having lots of kids because it's only rich people that have kids, right? I don't have kids, but as I live in NY state and earn a little over 100K, AMT is always a risk, any time I am considering selling stock. Yes, I understand, many people may think I am rich, but I've worked hard for my money and I pay my fair share of taxes already. It's not like those of us who work for a company have any loopholes. Another interesting thing about AMT is the treatment of options. Normally if you exercise options you don't pay taxes until you sell stock and have actual gains, but under the AMT you owe taxes the moment you exercise options. Now imagine a situation in which you get some part of your salary in options - as it was with many dot-com employees during the internet boom, exercise options before they expire and then decide to wait with selling stock e.g. to have long-term rather than short-term gains or just because you like the stock. (Yes, I know it is stupid) In the meantime the bubble bursts, so there is no money, but you still owe taxes. Your startup may have gone out of business, so you are out of the job too. Apparently this happened to many people when the internet bubble burst. They ended up owing millions to the IRS without ever seeing the money. One could say they should've sold the stock the moment they exercised the options, but how many of us really know about this rule. I've never had any options, thankfully, but when I sold my condo (that I rented out) and did my taxes I read all the AMT rules, and found the stories on the internet. BTW - TurboTax figures it all out just fine, no need to get an expensive accountant unless the taxes are really complex. The thing that annoys me most about AMT is that it hurts those of us who live in high-tax states. Why is state income and property tax deduction considered to be a loophole for the rich? Same with having lots of kids because it’s only rich people that have kids, right? I don’t have kids, but as I live in NY state and earn a little over 100K, AMT is always a risk, any time I am considering selling stock. Yes, I understand, many people may think I am rich, but I’ve worked hard for my money and I pay my fair share of taxes already. It’s not like those of us who work for a company have any loopholes.

Another interesting thing about AMT is the treatment of options. Normally if you exercise options you don’t pay taxes until you sell stock and have actual gains, but under the AMT you owe taxes the moment you exercise options. Now imagine a situation in which you get some part of your salary in options – as it was with many dot-com employees during the internet boom, exercise options before they expire and then decide to wait with selling stock e.g. to have long-term rather than short-term gains or just because you like the stock. (Yes, I know it is stupid) In the meantime the bubble bursts, so there is no money, but you still owe taxes. Your startup may have gone out of business, so you are out of the job too. Apparently this happened to many people when the internet bubble burst. They ended up owing millions to the IRS without ever seeing the money. One could say they should’ve sold the stock the moment they exercised the options, but how many of us really know about this rule. I’ve never had any options, thankfully, but when I sold my condo (that I rented out) and did my taxes I read all the AMT rules, and found the stories on the internet.

BTW – TurboTax figures it all out just fine, no need to get an expensive accountant unless the taxes are really complex.

]]> By: Ryan S. http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/comment-page-1/#comment-113983 Ryan S. Mon, 24 Dec 2007 06:29:30 +0000 http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/#comment-113983 I wish they would have just indexed this to inflation long ago rather than have it come up as an issue every year... - Ryan http://uncommon-cents.net/ I wish they would have just indexed this to inflation long ago rather than have it come up as an issue every year…
-
Ryan
http://uncommon-cents.net/

]]> By: Minimum Wage http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/comment-page-1/#comment-113949 Minimum Wage Sat, 22 Dec 2007 15:43:25 +0000 http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/#comment-113949 I support an Alternative Maximum Tax, I support an Alternative Maximum Tax,

]]> By: Budgetboy http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/comment-page-1/#comment-113945 Budgetboy Sat, 22 Dec 2007 00:17:57 +0000 http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/#comment-113945 Great post, I have been looking for a better description than the IRS gives! Great post, I have been looking for a better description than the IRS gives!

]]> By: Stephen http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/comment-page-1/#comment-113944 Stephen Sat, 22 Dec 2007 00:03:08 +0000 http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/#comment-113944 This is exactly why I have a financial adviser. She takes care of us and figure this stuff out. The AMT personally is pretty annoying since my wife and myself would be paying it save for all the money we dump in our 401k and congress 'fixing' the problem for another year. Granted I know I should not be complaining, since it is really not a terrible problem to have. But still, its pretty obvious that the AMT really needs to be updated for this day and age. My wife and I work really really hard and invest a ton just to save our butts from AMT. This is exactly why I have a financial adviser. She takes care of us and figure this stuff out. The AMT personally is pretty annoying since my wife and myself would be paying it save for all the money we dump in our 401k and congress ‘fixing’ the problem for another year.

Granted I know I should not be complaining, since it is really not a terrible problem to have. But still, its pretty obvious that the AMT really needs to be updated for this day and age. My wife and I work really really hard and invest a ton just to save our butts from AMT.

]]> By: MoneyNing http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/comment-page-1/#comment-113938 MoneyNing Fri, 21 Dec 2007 18:44:38 +0000 http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/#comment-113938 If it's $100k a year, then I would be happy to trigger it! :) If it’s $100k a year, then I would be happy to trigger it! :)

]]> By: nickel http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/comment-page-1/#comment-113934 nickel Fri, 21 Dec 2007 16:28:42 +0000 http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/#comment-113934 Right, from what I've read, if you make less than $100k you probably don't have to worry. Right, from what I’ve read, if you make less than $100k you probably don’t have to worry.

]]> By: Mrs. Micah http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/comment-page-1/#comment-113933 Mrs. Micah Fri, 21 Dec 2007 16:07:52 +0000 http://www.fivecentnickel.com/2007/12/21/what-is-the-alternative-minimum-tax-amt/#comment-113933 So odds are that if we earned less than $30,000 this year, we don't have to pay it? Thanks for your explanation...I think now I finally have a grasp of what it is. So odds are that if we earned less than $30,000 this year, we don’t have to pay it?

Thanks for your explanation…I think now I finally have a grasp of what it is.

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