Deductions Trigger AMT

Physician's Money Digest, August15 2004, Volume 11, Issue 15


The alternative minimum tax (AMT)was originally aimed at wealthy taxpayerswho used exemptions and deductionsto slash their tax bills, often to zero. TheAMT is now starting to impact middle-incometaxpayers, however, targetingthose with lots of deductions and exemptions,such as those who have large familiesor live in high-tax states like NewYork or California. Check with your taxprofessional; many are advising clients torun the numbers on the AMT beforemaking any tax-related moves, like acceleratingstate and local tax payments. Inextreme cases, some taxpayers may actuallysave money by taking the standarddeduction instead of itemizing. Unless changes are made in the tax law,20% of all US taxpayers, including everymarried couple with an income between$100,000 and $500,000, will be subjectto the AMT by 2010, according to aCongressional Budget Office report.