2007 tax filing deadline...

[Dan McGuire]

Dan, AMT is very much a risk of more and more every year. I finished our taxes last night and all of what we owe is from two things...AMT plus 1/3 of the $600 that Professor Dr. SWMBO got 1099ed on from NIH last year. ("self-employment tax" on the latter) Our withholding was spot on outside of that for a small payment due. (always my plan) We never got hit with AMT until we had kids arrive in our lives in 2005. That seems to be one of the triggers...dual income professionals with kids.

In a nutshell, the way AMT works is that there is an alternative formula that is used to calculate tax that throws out personal exemptions (Kids) and a number of other deductions, such as state/local taxes, home offices, etc. They figure your AGI differently for this method. If that calculation results in a higher tax liability, the difference between that number and the tax owed under the regular formula is added to your tax bill. Although there are some scenarios that one could get a credit for it in a subsequent year and not owe AMT, it appears that for most folks, once you "break the line" you're stuck with it. This tax was originally intended to insure that very high income people with many legitimate and creative deductions/credits still paid income tax. Unfortunately, it was never indexed like other tax items and it's hitting more and more taxpayers at an accelerating rate. I forget the exact statistic, but it's only going to be a few more years that something like half of the "married with children" middle income families will be paying this tax if it is not re-framed.

Thanks Jim,

I narrowly avoided AMT for 2006 year, but got a good bump in salary last month, as did my wife for 07, now I am concerened. My search on information thus far has been confusing to say the least. I finally contacted a lawyer friend who put me in touch with his tax professional. Once the 06 tax season is completed we are going to sit down with her to do some long range tax planning. One of the first things coming out of my work shop this spring is tax shelters!!

[Jim Becker]

One of the first things coming out of my work shop this spring is tax shelters!!

Which is exactly what AMT works against. It's good you'll be working with a tax professional as this needs to be done right or you could end up not avoiding that tax and incuring other costs, too.

[Mark Pruitt]

Tax return deadline?? Not an issue. Mine are done, turned in, and the money is already sitting in the bank.

Why don't ya just rub it in a little, Jim?