Truth 7The alternative minimum tax
It’s bad enough when you have to file and pay one tax bill. But each tax season, millions of taxpayers discover they are liable for a second, more costly levy: the alternative minimum tax.
This parallel tax system, commonly called the AMT, was created in 1969 to ensure that the well-to-do paid at least some tax. Back then, that meant a handful of taxpayers who earned $200,000 or more weren’t allowed to claim some tax breaks.
Today, the AMT’s reach goes beyond the wealthy. More middle-class taxpayers are finding they are the tax’s prime target. The reason? Inflation. Over the last 40 years, wages have increased, but when lawmakers designed the AMT, they didn’t build in the annual cost of living ...