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TAX INFORMATION
Interested in completing your taxes on-line this year? Then check out http://www.turbotax.com
Don't get bit by the "AMT BUG"
the Alternative Minimum Tax.
The IRS treats many middle-class taxpayers as if they were millionaires. Half of the 2 million households that earn $30,000 to $100,000 are expected to get stung by the alternative minimum tax, which was designed to punish the wealthy for being successful and keep them from sheltering income.
The AMT imposes a heavier burden than ordinary income tax by taxing items normally out of Uncle Sam's reach.
Why is this a heartburn for you? Because while incomes have risen with inflation, the AMT's exemptions of $45,000 for married couples and $33,750 for single taxpayers have been the same since 1993. To figure out whether you owe the AMT, calculate your taxable income the regular way. Then use Form 6251 to add back deductions that can't be claimed under the AMT.
Once you've calculated your taxable income, subtract $45,000 if married and $33,750 if single. Then multiply the remainder by AMT tax rates. The rates are 26% up to $175,000, and 28% beyond. That's what you would owe under the AMT. Compare that to your regular tax bill. You pay whichever is higher.
Will Congress rescue the middle class? Lawmakers stepped in to stop child, education, and other credits from triggering the AMT on 1998 returns--a break many think is here to stay. But as the AMT traps more taxpayers, the extra revenue it creates for Congress to spend may prevent reform. Ask your Tax Pro for some strategies to cut your taxes. Drop your Rep in Congress a note to repeal the AMT.
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