John M. Hoffman & Associates CPAs

Frequently Asked Questions

Alternative Minimum Tax (AMT)

"Can you describe a typical taxpayer who pays AMT?"

Here is an example (2006 rates): Married couple with two children. Husband and wife both work with combined wages of $200,000. No other income. For deductions they spent $16,000 on the two children's braces, $9,200 in state income tax, $4,000 in real estate tax, $500 in auto excise taxes, $12,000 in mortgage interest and $520 in charitable contributions. This upper middle income taxpaying family is subject to the AMT. Their AMT calculation comes out to $34,364 while there AMT comes out to $34,918. This excess of $554 is their AMT and none of it is refundable in future years as a credit.

Take a look at the sample tax forms to see what we mean.

What can these taxpayers do about their AMT - just about nothing. We suggest they not let it bother them, and hope perhaps that the braces are it for a while as to large medical expenses.