AMT - who,what,options

[ELVIS]

it is early, but what are the warning signs of getting hit with the bs amt? i have heard it is the income going over 100,000 mark. we have kids,mort inst, charity,etc. however are we stuck with paying the 26% or are there options?


also, does anyone use the ira for kids education? furthermore, does anyone use it to help offset private school costs?

who else here has been or will be hit with this crap and what are you doing about it?

all input is welcome....

 

[White Shadow]

Elvis........what is AMT?

 

[BahamaMama]

Elvis........what is AMT?

in case he isn't around, i'll field this one for him.... it is Alternative Minimum Tax

 

[ELVIS]

i cannot believe none of you heavy hitters on this board have been affected by this?

 

[BobbyBlueChip]

If you own a business, there's plenty that you can do; if not, it's pretty hard to get around if you plan on keeping your return legal.

 

[TAZ]

BahamaMama is correct Alternative Minimum Tax. It does not necessarily apply to those with income in excess of 100k it is possible to pay AMT with income under it. It is a very complex calculation, the jist of it is that if you make alot of money but reduce it by (allowable) deductions, the government wants to make sure you pay your fair share and 'takes away' some of these deductions so you are playing on a level field. Kind of like a handicap or curve.

With regard to kids education, I would highly recommend a section 529 plan, each state has their own, but you do not have to invest in your own states plan. The 529 plan allows for tax-free withdrawls for education.

Get my e-mail if you have more specific questions.

 

[Doughboy]

I agree with the 529. I have one for myself, for my kids I jhaven't had yet so I can get started early. The problem with the Ed. IRA or Coverdale IRA is that there is a cap on your salary. It sounds like you will be at the cap soon if not already. The 529 is perfect because you can put a ton of money into it, and withdraw it tax free for qualified expenses. You also don't have the income limitations.

I have a client in California who is AMT, and there iisn't much you can do. You accountant will be able to help you. I think also if you ar e going to be AMT, then getting an accountant for a few hundred bucks is worth it for sure.

You are also welcome to get my e-mail if need be.

 

[ELVIS]

thanks guys. i had an accountant 2 yrs ago. i did not need him because of the turbo tax and the family income was much lower. i sweated the amt last year but was not hit. i believe i really need an accountant at this point and i will seek out one. in the mean time i will ask jack for both of your emails. i may be overreacting but i am damn near sick over this bs. we are making good $$, but have a ton of left over school debt and we are soon to be blessed with a 3rd child. i have read of the horror stories for other families.... furthermore, we are not rich, but do fall into the "danger zone". we may be ok in the end, but i am a worrisome sob when it comes to my $$ and uncle sam.

:cursin:

 

[ocelot]

You can bet Congress is more worried about their next raise than fixing this problem.

It would be nice if just for once, instead of our lawmakers ADDING another "patch" to our tax code, they fixed a perceived problem by eliminating some of the tax code, which is now far larger than the Bible!

 

[BBMF]

Yo Elvis:

I am a CPA in Minnesota (enjoy Randy Moss this year!). The main "triggers" for the AMT for most people are located on Schedule A (Itemized Deductions). State Income Tax, and Miscellaneous Itemized Deductions (specifically Employee Business Expenses) are the main culprits.

I'd be happy to look over your tax situation and consult you. Get my email and shoot me a message.

 

[big joe]

Elvis,,here's what I'm told every year...
There's no way around it. The deductions are taken away and you have to pay.
This tax sucks big time,,,no way out!
There have been some talk about raising this income level, since it has been several years when it was established to get the big, big cats who were avoiding taxes with loopholes. Now, the incomes are among a bigger group of folks who were never supposed to be a target for AMT.
Sorry, for the "no-hope" message,,but that's what I'm told every year.