Reply #43: AMT could snag millions this year

[AnneD]

Year-end tax planning is an iffy proposition this year — again — as Congress debates important issues that will affect the tax bills of millions of middle-income Americans.

One of the biggest accidents waiting to happen is the encroachment of the alternative minimum tax, the parallel tax system that was designed in 1969 to ensure that wealthy people accustomed to sheltering much of their income from tax paid at least something into government coffers. Taxpayers with a chance of paying the AMT must compute their taxes both ways and then pay the higher amount.

But the AMT was never indexed for inflation, and as incomes grew over the years, more and more Americans fell into its clutches. In former years, Congress has patched the law so taxpayers could exclude more income before paying the AMT. But not this year. An estimated 19 million people could pay the higher AMT this year in addition to the 4 million who had to pay it in 2006. The income "danger zone" for falling into the AMT has fallen from $200,000 or more to $100,000 or less, for joint filers in certain circumstances.

Nearly three out of four families earning from $75,000 to $100,000 could face the AMT this year, along with 97 percent of families earning from $100,000 to $200,000.

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http://www.chron.com/disp/story.mpl/business/5309916.html

You have some time to crunch the numbers. Good Luck.