Posted on 02/01/2004 6:12:04 AM PST by sarcasm
Beware: The alternative minimum tax could soon snag you.
The minimum tax, enacted to make sure that even the ultra-rich pay some income taxes, may hit 44 million households, including families making less than $50,000 a year simply because they have lots of children to claim as exemptions or take other tax breaks.
The non-partisan, private Tax Policy Center estimates the tax will:
Congress enacted the tax in 1969 amid reports that 155 ultra-rich Americans avoided paying a penny in income tax. The alternative tax has been on the books since then, never indexed to inflation.
The tax breaks President Bush and Congress enacted since 2001 expanding child tax credits and "marriage penalty" relief make it more likely taxpayers will owe the alternative minimum tax.
Bush called for permanent extension of these tax breaks in his State of the Union address but not reform of the alternative minimum tax, which denies families most of the Bush write-offs. The 2003 tax cut contains a temporary provision that will help many families avoid the alternative minimum tax through 2004. But repealing the tax entirely would cost the Treasury $600 billion in the next 10 years.
And there's insult to the injury, the IRS says:
But that won't happen, it's superbowl time, valentines day, groundhog's day, memorial day, kids to camp, laundry to fold, taxes to prepare, christmas shopping........no time for anything to be done.
If you only have a coulple of W-2s, do not itemize deductions, have nothing but simple interest to report on Schedule B, have no Schedule C business loss or income, have no Schedule E income, and have none of the thousands of other complications that send you to the bog of law and IRS regulations, you might be right.
But if you have more than the simplest return, if you spend a miniscule amount of time like 12 hours to prepare your taxes, they will be wrong and you will be paying Uncle Greedy way more than you need to.
The same is true of your wages, paid vacation(s), sick leave, matching retirement funds, medical, and other benefits....Be careful what "business costs" you choose to expose.
I think that the people who are worried about getting caught up in AMT are the ones who figure out a way to deduct the ink for their computer printers, etc.
About fifteen years ago, I invested some money in a few limited partnerships. The general partners used the money to fund some real estate ventures in Brooklyn, New York. They purchased some rental property (apartment houses) and converted them into co-ops, whereby the apartments can be sold to individuals. Each year, I get a K-1 form, which summarizes the year's activity. I live in New Jersey, the apartments are in New York, and both are in The United States.
Until I started getting these K-1's, I always had done my taxes by myself. I am a pretty smart guy (honestly) with a background in finance. I wouldn't have a prayer of translating the deductions, depreciations, carry forwards, carry backs and all the other arcane accounting calculations, into correct figures for the tax forms in New York, New Jersey, or on the federal form. I pay an accountant (a lot of money) to do it, and the resulting paperwork weighs more than The Yellow Pages in a medium-sized town. On top of this, the deductions that come about due to the arcane real estate transactions make it necessary to run the Alternate Minimum Tax calculations to determine if it is higher than the tax computed in the standard manner. The higher one must be paid. My accountant uses some professional tax software, and it takes him several days to generate my returns. Well, he charges me for several days, anyway. :)
Oh, I see, trust the tax form...
Have you read the articles that frequently turn up around tax time, that describe the significant dollar differences in the same individual's tax liability determined by the various professional tax services using the same data?
The "experts" do not agree on a typical individual's tax liability.
Anyone who has the types of investment gains/losses/ etc you do is crazy to try and do the return themselves.
Which sucks when you are a small business person. I would much rather have that 7+% to offer as a carrot/raise for my employees, or use for capital improvements.
The only reason they have the employees pony up the half is because the worker feels less of hit that way, and is more likely to swallow the theft.
And that's what I mean by "buying into" the leftist's "social security vs payroll tax" scheme.
Try to remember that until recently, SS was promoted as a "pay as you go" scheme... That you were to get out of it what you put in.
Since the leftists have tried to seperate the two, as you are doing, they can claim that a) not everyone is paying in their "fair share," and b) that "the rich" are going to get too much out of it.
Like I said, when you do place to two on different "sides of the ledger," you're buying in to their scheme.
Why would it be "fair" that someone who contributes 12.4% on $80,000 can get the same back (assuming that SS is still around, which I'm doubtful of) as someone who contributes 12.4% on $8,000,000? Or with means testing, why would it be "fair" that someone who contributed 12.4% on $16,000 should get more back than either of the other two?
I'd really like to know what your definition of "fair" is.
Mark
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