Alternative Minimum Tax changes 2007
08-14-2007, 07:57 AM
#1
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Joined APC: Aug 2006
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Posts: 267
Alternative Minimum Tax changes 2007
Does anybody out there understand the effects of the 2007 tax law change as it applies to AMT?
The way I see it, we lose most all of our ability to deduct mortgage interest, state and property tax, and just about every other avenue we are accustomed to employing on our taxes.
AMT as far as I see hits you at 26% of the first $175,000 then 28% on everything else. Again, if you have rental properties, all you can do is defer the deductions till later. Uncle Sam wants you to pay now, and I think those of us in this profession, especially Captains are going to be in for a surprise come April 15th. Basically, all of the tax cuts that the Bush administration passed are nullified by the insidious AMT law changes.
I have searched for ways around it, but am at a loss. Do any of you use an aggressive CPA that has a viable strategy?
The way I see it, we lose most all of our ability to deduct mortgage interest, state and property tax, and just about every other avenue we are accustomed to employing on our taxes.
AMT as far as I see hits you at 26% of the first $175,000 then 28% on everything else. Again, if you have rental properties, all you can do is defer the deductions till later. Uncle Sam wants you to pay now, and I think those of us in this profession, especially Captains are going to be in for a surprise come April 15th. Basically, all of the tax cuts that the Bush administration passed are nullified by the insidious AMT law changes.
I have searched for ways around it, but am at a loss. Do any of you use an aggressive CPA that has a viable strategy?
08-14-2007, 10:23 AM
#2
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Posts: 494
Originally Posted by MAWK90
Does anybody out there understand the effects of the 2007 tax law change as it applies to AMT?
The way I see it, we lose most all of our ability to deduct mortgage interest, state and property tax, and just about every other avenue we are accustomed to employing on our taxes.
AMT as far as I see hits you at 26% of the first $175,000 then 28% on everything else. Again, if you have rental properties, all you can do is defer the deductions till later. Uncle Sam wants you to pay now, and I think those of us in this profession, especially Captains are going to be in for a surprise come April 15th. Basically, all of the tax cuts that the Bush administration passed are nullified by the insidious AMT law changes.
I have searched for ways around it, but am at a loss. Do any of you use an aggressive CPA that has a viable strategy?
The way I see it, we lose most all of our ability to deduct mortgage interest, state and property tax, and just about every other avenue we are accustomed to employing on our taxes.
AMT as far as I see hits you at 26% of the first $175,000 then 28% on everything else. Again, if you have rental properties, all you can do is defer the deductions till later. Uncle Sam wants you to pay now, and I think those of us in this profession, especially Captains are going to be in for a surprise come April 15th. Basically, all of the tax cuts that the Bush administration passed are nullified by the insidious AMT law changes.
I have searched for ways around it, but am at a loss. Do any of you use an aggressive CPA that has a viable strategy?
You are correct. Once your income climbs into the AMT arena you lose many of your deductions. For example my property taxes were $10K last year and under the AMT zero of that is deductable. Under the normal tax tables it would be fully deductable.
I have written several emails to all of my politicians. It does no good. Do some reading on the AMT and you will see that it was introduced back in the 80's to capture tax revenue from the wealthy. The definition of wealthy over 20 years ago was a lot different than today. The AMT has not been reindexed for inflation and is starting to hit the upper middle class hard. It has become a windfall tax revenue for the government and until they can find other sources to replace that revenue you will find little help in Washington.
I have made several comments on this subject on this forum in regards to the LOA and tax equalization package. For many taxpayers, including us pilots, the biggest tax deductions are our homes. If you sell and move to an FDA and become a renter your "equivalent US tax burden" under the LOA will become much higher because you lose your biggest deductions and this will raise your AGI. If you weren't under the AMT now you may very well be then. Once under the AMT additional tax deductions become ineligible and your taxes go even higher. I urge everyone to see a tax advisor before selling your home and moving to an FDA to get an estimate of your actual income taxes.
08-14-2007, 10:33 AM
#3
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Posts: 1,433
AMT sucks. $1500 extra 2 years ago and $1800 last year.
More and more folks become "eligible" every year. By 2010 most earners making over $75k will get caught since it's not indexed.
Write your congressmen. There are moves afoot to get rid of it or modify it, but since it provides so much revenue, I wouldn't hold your breath.
More and more folks become "eligible" every year. By 2010 most earners making over $75k will get caught since it's not indexed.
Write your congressmen. There are moves afoot to get rid of it or modify it, but since it provides so much revenue, I wouldn't hold your breath.
09-23-2007, 06:46 PM
#6
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Joined APC: Mar 2007
Position: Capt
Posts: 3,215
Hi!
AMT was started in the 1960s, because there were a few, very wealthy Americans, who paid $0 income tax because of all the loopholes. It was designed so the very rich would have to pay something.
Interesting Note: Eisenhower, a REPUBLICAN, supported a 92% tax bracket for the wealthy. He vetoed a DEMOCRATIC TAX CUT, because it was fiscally irresponsible.
The main reason that Congress went along with the Bush tax "cuts", was that they knew the AMT income floor was stationary, and that more and more non-wealthy (you and I) would become subject to the AMT.
They knew that the massive tax revenues required for the current humongous money monster that our government has become, would be sated by the flow of AMT monies into the gov't coffers.
In other words, us middle-class AMTers are paying for the tax cuts that were approved.
Why do some, and not others, pay AMT?
AMT elligibility is VERY complicated. I also know of people that do their own taxes, and when the computer program asks them/they get to the section on paper about the AMT, they skip over this and hence don't pay AMT, even though they're supposed to. If they get audited, they'll pay hefty fines, but if they're not audited, then they get away with it.
I want to get rid of the Income/Inheritance/Captial Gains/etc. taxes and replace them with either a National Sales Tax, or a Value-Added Tax (similar to a NST).
Also:
The last few years, Congress has passed a stopgap measure to keep the AMT elligibility income floor elevated. Will they again?
cliff
GRB
AMT was started in the 1960s, because there were a few, very wealthy Americans, who paid $0 income tax because of all the loopholes. It was designed so the very rich would have to pay something.
Interesting Note: Eisenhower, a REPUBLICAN, supported a 92% tax bracket for the wealthy. He vetoed a DEMOCRATIC TAX CUT, because it was fiscally irresponsible.
The main reason that Congress went along with the Bush tax "cuts", was that they knew the AMT income floor was stationary, and that more and more non-wealthy (you and I) would become subject to the AMT.
They knew that the massive tax revenues required for the current humongous money monster that our government has become, would be sated by the flow of AMT monies into the gov't coffers.
In other words, us middle-class AMTers are paying for the tax cuts that were approved.
Why do some, and not others, pay AMT?
AMT elligibility is VERY complicated. I also know of people that do their own taxes, and when the computer program asks them/they get to the section on paper about the AMT, they skip over this and hence don't pay AMT, even though they're supposed to. If they get audited, they'll pay hefty fines, but if they're not audited, then they get away with it.
I want to get rid of the Income/Inheritance/Captial Gains/etc. taxes and replace them with either a National Sales Tax, or a Value-Added Tax (similar to a NST).
Also:
The last few years, Congress has passed a stopgap measure to keep the AMT elligibility income floor elevated. Will they again?
cliff
GRB
09-23-2007, 07:03 PM
#7
New boss = Old boss
Joined APC: Mar 2005
Position: Ca B737
Posts: 2,762
Originally Posted by MAWK90
Does anybody out there understand the effects of the 2007 tax law change as it applies to AMT?
The way I see it, we lose most all of our ability to deduct mortgage interest, state and property tax, and just about every other avenue we are accustomed to employing on our taxes.
The way I see it, we lose most all of our ability to deduct mortgage interest, state and property tax, and just about every other avenue we are accustomed to employing on our taxes.
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