Articles from The Mediator

Income Tax Headache: Another AMT Patch

Anyone who has ever paid Alternative Minimum Tax (AMT) on their Federal tax return knows what an insidious tax it is. AMT is a minimum tax you must pay — even if your actual income tax is lower. The idea 42 years ago, when AMT was first implemented, was to make sure that the very wealthy couldn’t avoid a minimum level of tax. Often AMT is difficult to plan for or see coming until it’s right there on your tax return.

I have noticed over the past 10 years that more clients now pay AMT, many of whom are hardly super-wealthy. This is because AMT is not indexed for inflation — so as income increases due to inflation, more people are ensnared by the AMT each year.

So Congress has once again enacted a ‘patch’, which is a temporary change to some of the AMT rules, to keep even more people from having to pay the tax. However, the patch expires at the end of 2011, and unless another patch is enacted, yet more will pay the unnerving AMT.

Recent Articles

Spending Limits Help Couples?

Couples that agree on spending limits have less conflict about money.

Legal Documents for College

Critical legal documents parents should have in place for college students.

Tax Stuff: A New Use for 529s

Owners of overfunded 529 college savings accounts can roll some of the funds to a Roth IRA tax free.

Going Up: 401(k) Limits

IRS has raised contribution limits for most retirement plans for 2023.