Back in 1969 you dreamed of a $20,000 a year salary and thought you would be set. Today inflation has changed those dreams. But some serious tax issues have also changed since 1969 when Congress passed the Alternative Minimum Tax Law to ensure that the very rich with very convoluted tax shelters paid at least some income tax. Congress has not been keeping up with the times and have failed to account for inflation and adjusted the minimum limit. Today the limit for the AMT could be around $60,000 for couples filing jointly for 2005 and precluding any further action by Congress, it could fall to under $50,000 next year.
If you got a large capital gain, took those stock options or just have a number of kids, you may get a shock. More of your income is being taxed, you are getting smaller writeoffs for state and local taxes, mortgages and home office deductions as well as business expenses and accounting expenses.
What to do? Look for Form 6251 that helps you figure out if you are going to owe any AMT. Then check out the IRS web site at www.irs.gov and the AMT Assistant. Your calculations should take about ten minutes rather than an anticipated day of pencil and paper. Then call your Congressman and tell him or her to get on the move and change the archaic AMT levels.