The Dreaded IRS "AMT"

This blog is primarily about resolving back IRS tax issues, but I've had a few questions about the mysterious AMT (Alternative Minimum Tax) so I thought I'd give you a "101" on it.

Actually, I'm going to let someone else give you the 101. The following is an excerpt from an article by Kaye A. Thomas of Fairmark.com. You can read the entire article here.

A brief overview of the alternative minimum tax (AMT).

The alternative minimum tax (or AMT) is an extra tax some people have to pay on top of the regular income tax. The original idea behind this tax was to prevent people with very high incomes from using special tax benefits to pay little or no tax. The AMT has increased its reach, however, and now applies to some people who don't have very high income or who don't claim lots of special tax benefits. Proposals to repeal or reform the AMT have languished in Congress for years, but effective action does not appear to be on the horizon. Until Congress acts, almost anyone is a potential target for this tax.

The name comes from the way the tax works. The AMT provides an alternative set of rules for calculating your income tax. In theory these rules determine minimum amount of tax that someone with your income should be required to pay. If you're already paying at least that much because of the "regular" income tax, you don't have to pay AMT. But if your regular tax falls below this minimum, you have to make up the difference by paying alternative minimum tax.Attorney Jack Manhire is an 11-year veteran tax attorney who has helped individual, corporate, and government clients save over $127,000,000 in back IRS taxes. You can contact him by posting a comment on his blog at http://taxhelpirs.blogspot.com/.