The Lotus Cars Community banner

1 - 17 of 17 Posts

·
Registered
Joined
·
4,164 Posts
Discussion Starter #1
I am doing my taxes on Turbotax and just found out that apparently I need to pay the Alternative Minimum Tax. Are there any numbers that I can "massage" that would work to my benefit, by not making me pay this tax?

Feel free to communicate by pm. I appreciate any info.
 

·
Registered
Joined
·
3,185 Posts
i'm not a CPA, but on turbo tax, try a scenario where you contrbute $4000 to a traditional IRA. Not sure if $4k will make you fall below the AMT threshhold though...
 

·
Registered
Joined
·
1,831 Posts
You can always pay someone else to screw up your taxes for you.. oops I mean do your taxes for you :D
 

·
Registered
Joined
·
4,117 Posts
Oh ya, AMT...what a load of **** that is. Here's what you owe...oh wait...include this lump in addition!! Me->:thwack:<-AMT

And anyone know how to "massage" the numbers so I don't owe a Lambo?? :(
 

·
Registered
Joined
·
347 Posts
Ian if you have a lot of passive income, that may be what is triggering this. In my experience we have a lot of itemized deductions and only get dinged a bit as we do not have a lot of passive income. Also, there are certain things that normally would look like passive income, but are not such as earnings from oil partnerships. Unless you have classified something wrong, AMT is what it is unfortunately.

Welcome to the ranks of the "wealthy" (ie. - just about any family that earns $100,000 a year combined income or more a year). Boy don't you feel better now!!

Taxes are sooo great...
 

·
Registered
Joined
·
169 Posts
Here's the AMT worksheet from the IRS, if you want to run the numbers manually and see how it works:
http://www.irs.gov/pub/irs-pdf/f6251.pdf

My understanding is that the AMT has an initial standard deduction (about $44k?) that's much higher than a normal 1040 return, but then it disallows many deductions you can claim on Schedule A. Meaning, at a crude level, if your Schedule A deductions are higher than the AMT deduction, you pay the AMT.

I suppose you can get around that by not claiming things on your Schedule A, but that'll raise your tax liability anyway.

Disclaimer - I'm not a tax nerd, so I could be completely mistaken on my understanding of how the AMT works. :)

The goal of the AMT was to prevent somebody who makes $100k from claiming $100k of deductions, essentially. This was back in the days when making $100k made you extremely wealthy - these days, normal people in decent jobs with reasonable deductions are being caught up in the AMT because the numbers haven't ever been adjusted much.
 

·
Registered
Joined
·
3,366 Posts
I went the Turbo Tax route for years, but then decided to pay a guy who specializes in folks who work from their homes (like me) to do my taxes. Best decision I ever made. The year I switched from TT to Bradley McGrew I thought I was going to owe 4K at the end of the year (this is what TT said). After Bradley noticed a number of deductions that I had missed I ended up with a $4K refund. SOLD.

If you are in the Austin area, I can recommend Bradley very highly.
 

·
Registered
Joined
·
4,117 Posts
AMT "raises" my taxes by about 5.5k / year. And you explain it well...keeps people who make decent amounts of money from writing off too much. There's also several "gotchas" for people who make too much, even down to how our personal exemptions get slashed by 2/3 after a certain income threshold. And don't get me started on the stimulus package that I'm personally financing for all the non-taxpayers. And the fact the health care write-off is a function of your income...so I can only write off health care expenses if I'm dying in the hospital enabling me to reach a ridiculous threshold.

Then there's state taxes...and trust me, paying taxes to several states really sucks.
 

·
Registered
Joined
·
1,265 Posts
Me->:thwack:<-AMT
hmmm... it's the other way around for me:
AMT-> :thwack: <-Me


Every year I hear the same thing... "Wow, you have 7 seven kids so must not pay anything in taxes!"
Makes me want to :thwack: them!
 

·
Registered
Joined
·
4,117 Posts
hmmm... it's the other way around for me:
AMT-> :thwack: <-Me


Every year I hear the same thing... "Wow, you have 7 seven kids so must not pay anything in taxes!"
Makes me want to :thwack: them!
You've got it right...I was putting it on what I'd like to do to the AMT. :D
 

·
Plug Whisperer
Joined
·
6,305 Posts
There are three ways to avoid AMT:

1) Make just enough to fly under the AMT Radar:rolleyes:
2) Make so much that you fly over the AMT radar:up:
3) Work on a cash basis, don't file a tax return and see how long it takes to get caught:huh:

...as someone else said, if you're W2 income earner, there's not much you can do to avoid it other than the above. It is what it is...

Best,

Phil
 

·
Registered
Joined
·
4,117 Posts
There are three ways to avoid AMT:

1) Make just enough to fly under the AMT Radar:rolleyes:
2) Make so much that you fly over the AMT radar:up:
3) Work on a cash basis, don't file a tax return and see how long it takes to get caught:huh:

...as someone else said, if you're W2 income earner, there's not much you can do to avoid it other than the above. It is what it is...

Best,

Phil
I don't think it has much to do with being a W2 earner...and the amount for your 2nd point is WAY more than you might think if I'm paying AMT. Basically, if the IRS thinks you are writing off too much according to your income level, you pay AMT added to your tax liability.
 

·
Plug Whisperer
Joined
·
6,305 Posts
I don't think it has much to do with being a W2 earner...and the amount for your 2nd point is WAY more than you might think if I'm paying AMT. Basically, if the IRS thinks you are writing off too much according to your income level, you pay AMT added to your tax liability.
Let me rephrase, working for "the man" has a lot do with it. You're correct that if you pay yourself with a W2, it doesn't have much to do with AMT. I was referring to the majortity of Americans that receive a W2 from an employer, in which case they can't get too creative in the way they deal with taxes. One whom is 1099 on the otherhand has a lot of flexibility and can typically make less top line income but take home more net of taxes. The tax system is quite favorable to business owners when compared to wage earners. Right, wrong, or indifferent, that's just the way it is... I'm personally fine with that, as I'm pro-small business owner.....despite me being a W2 earner....:up:

Quote: "your 2nd point is WAY more than you might think"

Regarding my 2nd point, how do you know what I might think?-poke-:D:D My 2nd point is correct and I didn't qualifiy how much it takes to have an effective tax rate high enough to avoid AMT. In otherwords, there's an income point where you can have all the "normal" deductions you can think of (mortgages, dependants, PP taxes, etc), but they still won't be enough to put you into AMT danger, because you're still paying over the AMT tax rate even with all the deductions. Believe me, you don't have to be Bill Gates to be in this category. $500K will get it done for instance (could be considerably less depending on the situation)... In any case, this is good problem to have...

That's all I was getting at with my 2nd point...

Best,

Phil
 

·
Registered
Joined
·
4,117 Posts
The tax system is quite favorable to business owners when compared to wage earners.
Unfortunately, I'd have to disagree...SET is horrendous.

And trust me, $500k isn't enough...:evil: (getting close however, so I do see your point.)

The people I work with are all telling ourselves, "it seems like the more you make, the more the gov't penalizes you."
 

·
Registered
Joined
·
676 Posts
The people I work with are all telling ourselves, "it seems like the more you make, the more the gov't penalizes you."
Hey! You're unfairly rich! You should pay for all the bloated guvmint programs so that those poor slobs don't have to get a job! :panic:

Our accountant is doing our taxes.. With the wife owning a business, and the way the business is set up, it's income is our income.. I would never try to tackle our taxes myself.

Rebate? What's a rebate?
 
1 - 17 of 17 Posts
Top