Thursday, May 30, 2013

Key facts about the Alternative Minimum Tax

Alternative Minimum Tax

Origin: Created in 1969 in response to concerns that the wealthy were avoiding income taxes by claiming extensive deductions.

Who it affects: In 2011, the alternative minimum tax applies to married couples filing a joint return with income over $74,450, single people earning more than $48,450, and married individuals filing separately with income over $37,225. Taxpayers over those thresholds must pay the higher of the AMT or the standard tax.

Who pays: Approximately 4 million taxpayers will pay $39 billion in AMT in 2011, an average of about $9,000 each, according to the Tax Policy Center. About half of taxpayers earning between $200,000 and $500,000 pay the AMT, while less than 1% of those with incomes below $100,000 will pay it, said the center.

How about California?  In 2008, 4.2% of Californians filing tax returns paid the alternative minimum tax, the 6th highest rate among states, said the Tax Policy Center.


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