Don't Get Caught in an AMT Spider Web

Physician's Money DigestFebruary 2007
Volume 14
Issue 2

For generous physicians over age 701/2,the Pension Protection Act may not be protectingyour charity donations from taxesas well as you thought. The Act preventscharity donations up to $100,000 madefrom an IRA from being taxed, but thealternative minimum tax (AMT) can throwa wrench into that tax sanctuary. Accordingto a recent Gregory/FCA press release,AMTvictims would be required to pay taxes ontheir IRA withdrawal regardless of its charitabledestination. Originally, the taxensured that the wealthy didn't avoid taxation,but because of its complicatedmethod of calculation, more people aresubject to the tax law. AMT is computedsimilarly to regular income taxes, exceptthat certain deductions you may claim onyour tax form are not subject to AMTexemption. AMT does not allow for stateand local income taxes or personal deductions(ie, medical bills, dependents, etc), sothe most susceptible are those with largecapital gains, an income between $100,000and $500,000, or large families. Any combinationof these factors increases yourchances of paying taxes on your IRA charitydonation because of AMT, but there is noway of knowing for certain unless you oryour financial advisor runs the numbers.

Related Videos
© 2024 MJH Life Sciences

All rights reserved.