A CBS report indicated that people with incomes of $45,000 filing as individuals may pay as much as $4,000 more in taxes than last year
The Cliff and AMT - $4000 more in 2012 taxes?
The Cliff and AMT - $4000 more in 2012 taxes?
I just read this eyepopping quote online regarding the impact on the Alternative Minimum Tax if we go over the cliff. Can someone explain the AMT to me and how a person making only $45K might end up paying $4K more tax in 2012 as a result? BTW, this is going to wreak havoc with your tax calculations this year, isn't it? Turbotax and HR Block are going to be issuing updates right up until April 15, so don't plan on filing any sooner this year.
We don't know where we are, or where we're going -- but we're making good time.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Your quoted text has nothing to do with AMT nor a Cliff.
As a citizen of the U.S. of A., you should be well-informed about the taxes you pay and how they work. So I can help you: A person making $45,000 probably doesn't pay any federal income taxes now if they contribute to their retirement plans and health care. They will pay a little more FICA tax ... maybe an extra $800 or less which is the same amount they were paying a couple years ago.
Your health care expenses may go up if your eyes have popped up from reading BS, so to save on health care costs, stop reading BS.
As a citizen of the U.S. of A., you should be well-informed about the taxes you pay and how they work. So I can help you: A person making $45,000 probably doesn't pay any federal income taxes now if they contribute to their retirement plans and health care. They will pay a little more FICA tax ... maybe an extra $800 or less which is the same amount they were paying a couple years ago.
Your health care expenses may go up if your eyes have popped up from reading BS, so to save on health care costs, stop reading BS.
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Re: The Cliff and AMT - $4000 more in 2012 taxes?
OP is confusing this year with next year as well.
Things are ALL SET for income earned in 2012...
Things are ALL SET for income earned in 2012...
Attempted new signature...
- randomwalk
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Re: The Cliff and AMT - $4000 more in 2012 taxes?
Not true. In several recent years, Congress passed the AMT fix at the very end of the year for the current tax year. They have yet to do so this year:The Wizard wrote:OP is confusing this year with next year as well.
Things are ALL SET for income earned in 2012...
http://online.wsj.com/article/SB1000142 ... 73492.htmlCongress hasn't passed that extension for this year. And with talks over avoiding the fiscal cliff stalled, it may not pass one. If it doesn't, the tax will hit almost 30 million additional households, and could hit some couples making as little as $45,000 and individuals making as little as $33,750, according to the IRS. Just four million households had to pay the tax in 2011.
Unless Congress passes an AMT exemption by the end of the year, "most taxpayers may not be able to file their 2012 tax returns until late March of 2013, or even later," acting IRS commissioner Steven Miller said in a letter to lawmakers this week. The retired IRS commissioner, Doug Shulman, warned at a recent conference of "real chaos" if that happens.
Last edited by randomwalk on Fri Dec 28, 2012 10:57 am, edited 3 times in total.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Your health care expenses may go up if your eyes have popped up from reading BS, so to save on health care costs, stop reading BS.
PRICELESS!
PRICELESS!
Re: The Cliff and AMT - $4000 more in 2012 taxes?
I agree - don't worry about things you can't control.midareff wrote:Your health care expenses may go up if your eyes have popped up from reading BS, so to save on health care costs, stop reading BS.
PRICELESS!
Chaz |
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“Money is better than poverty, if only for financial reasons." Woody Allen |
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Re: The Cliff and AMT - $4000 more in 2012 taxes?
Which is why I try to arrange things so I don't get a tax refund and have no incentive to file early.randomwalk wrote:Unless Congress passes an AMT exemption by the end of the year, "most taxpayers may not be able to file their 2012 tax returns until late March of 2013, or even later," acting IRS commissioner Steven Miller said in a letter to lawmakers this week. The retired IRS commissioner, Doug Shulman, warned at a recent conference of "real chaos" if that happens.
I do wish the IRS would release Pub 15, so that I can start estimating my taxes for 2013. I also usually set up my mom's payroll system over Christmas break, but it appears that I will not be able to do so this year and will have to guide her through it over the phone once the IRS releases the brackets and rates.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Thanks randomwalk. I don't know what kind of handwaving other posters are doing and appreciate the info you provided.
We don't know where we are, or where we're going -- but we're making good time.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Bloomberg reported recently that the IRS will issue withholding guidelines by 12/31.rkhusky wrote:I do wish the IRS would release Pub 15, so that I can start estimating my taxes for 2013. I also usually set up my mom's payroll system over Christmas break, but it appears that I will not be able to do so this year and will have to guide her through it over the phone once the IRS releases the brackets and rates.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
That would work for me, since we are flying home on the 2nd.HueyLD wrote:Bloomberg reported recently that the IRS will issue withholding guidelines by 12/31.rkhusky wrote:I do wish the IRS would release Pub 15, so that I can start estimating my taxes for 2013. I also usually set up my mom's payroll system over Christmas break, but it appears that I will not be able to do so this year and will have to guide her through it over the phone once the IRS releases the brackets and rates.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
absolutely not true that 2012 is set. Yes, there is a code that will be final at 12/31/12 11:59:59 but if nothing happens between now and then on 2012 there will be unhappy people. Probably the unhappiest will be anyone who had mortgage debt forgiven in 2012 as I believe that the current law has no exception for mortgage debt forgiveness.randomwalk wrote:Not true. In several recent years, Congress passed the AMT fix at the very end of the year for the current tax year. They have yet to do so this year:The Wizard wrote:OP is confusing this year with next year as well.
Things are ALL SET for income earned in 2012...
http://online.wsj.com/article/SB1000142 ... 73492.htmlCongress hasn't passed that extension for this year. And with talks over avoiding the fiscal cliff stalled, it may not pass one. If it doesn't, the tax will hit almost 30 million additional households, and could hit some couples making as little as $45,000 and individuals making as little as $33,750, according to the IRS. Just four million households had to pay the tax in 2011.
Unless Congress passes an AMT exemption by the end of the year, "most taxpayers may not be able to file their 2012 tax returns until late March of 2013, or even later," acting IRS commissioner Steven Miller said in a letter to lawmakers this week. The retired IRS commissioner, Doug Shulman, warned at a recent conference of "real chaos" if that happens.
Last edited by Sidney on Fri Dec 28, 2012 12:07 pm, edited 1 time in total.
I always wanted to be a procrastinator.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
For 2012, I have done a preliminary run of our taxes with TurboTax. Despite income about 10% higher than last year, our taxes will be lower and we will not pay any AMT. We were able to follow the guidelines about how to pay low taxes for a family with similar income found in this thread: http://www.bogleheads.org/forum/viewtopic.php?t=79510Browser wrote:Thanks randomwalk. I don't know what kind of handwaving other posters are doing and appreciate the info you provided.
No handwaving was used to pay lower taxes, but judicious use of current tax laws was used.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Does TT 2012 have the lower AMT exemption or does it assume the patch gets passed again?livesoft wrote:For 2012, I have done a preliminary run of our taxes with TurboTax. Despite income about 10% higher than last year, our taxes will be lower and we will not pay any AMT. We were able to follow the guidelines about how to pay low taxes for a family with similar income found in this thread: http://www.bogleheads.org/forum/viewtopic.php?t=79510Browser wrote:Thanks randomwalk. I don't know what kind of handwaving other posters are doing and appreciate the info you provided.
No handwaving was used to pay lower taxes, but judicious use of current tax laws was used.
I always wanted to be a procrastinator.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
If the AMT is allowed to remain as is (meaning no patch for 2012), my additional taxes due to AMT will be $7,800 this year. If they were to allow the state sales tax deduction in 2012 (this expired after 2011), my additional taxes due to AMT would be $9,700 this year.
Andy
Re: The Cliff and AMT - $4000 more in 2012 taxes?
In the past TT never assumed anything, but had current law. We don't have state income taxes nor mortgage interest deduction which are the usual AMT culprits, so I think we are good to go. In 2011, we didn't even itemize.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
OK, thanks. Just curious. Not doing a prelim return right now because my estimated payments have put me in safe harbor already. I suppose anyone using the software can look at the AMT form if they need to and see the exemption line to know if it is the lower (current law) amount. All will be fixed by the time I file in September.livesoft wrote:In the past TT never assumed anything, but had current law. We don't have state income taxes nor mortgage interest deduction which are the usual AMT culprits, so I think we are good to go. In 2011, we didn't even itemize.
I always wanted to be a procrastinator.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
.........................2012
National Income.... 15.5 T
Revenue...............2.5 T
- Spending............3.6 T
Deficit.................1.1 T
Revenue/National Income 16.13%
Spending/Nation Income 23.23%
If you paid less than 16% of your income, you are below average. You are the cause of the deficit.
If you paid 23% of your income, you are paying your way.
Someone making $100,000 per year should be paying $23,000 to cover the cost of all the services from the Federal Goverment they received.
National Income.... 15.5 T
Revenue...............2.5 T
- Spending............3.6 T
Deficit.................1.1 T
Revenue/National Income 16.13%
Spending/Nation Income 23.23%
If you paid less than 16% of your income, you are below average. You are the cause of the deficit.
If you paid 23% of your income, you are paying your way.
Someone making $100,000 per year should be paying $23,000 to cover the cost of all the services from the Federal Goverment they received.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Yep, we had safe harbor met, but a prelim return was important for us to decide on whether to bunch other deductions into this year or next year.Sidney wrote:OK, thanks. Just curious. Not doing a prelim return right now because my estimated payments have put me in safe harbor already. I suppose anyone using the software can look at the AMT form if they need to and see the exemption line to know if it is the lower (current law) amount. All will be fixed by the time I file in September.livesoft wrote:In the past TT never assumed anything, but had current law. We don't have state income taxes nor mortgage interest deduction which are the usual AMT culprits, so I think we are good to go. In 2011, we didn't even itemize.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
LOL! I received a lot more services than a measly $23,000 from the Federal government and thankfully I paid less taxes, too.grayfox wrote:Someone making $100,000 per year should be paying $23,000 to cover the cost of all the services from the Federal Goverment they received.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Andy,Wagnerjb wrote:If the AMT is allowed to remain as is (meaning no patch for 2012), my additional taxes due to AMT will be $7,800 this year. If they were to allow the state sales tax deduction in 2012 (this expired after 2011), my additional taxes due to AMT would be $9,700 this year.
Are you sure you are stating the result the way you intended? Failure to pass the AMT patch could increase your AMT and your total federal tax by $7,800. But a reinstatement of the sales tax deduction should reduce regular tax by the same $1,900 that it increases AMT, resulting in no net increase in total federal tax as a result of the sales tax deduction?
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Hi Mark. I think we are saying the same thing. What I am referring to is the "penalty" from AMT. If the sales tax deduction is reinstated, my regular tax will decline by $1900, but the AMT penalty will increase by $1900....and my total tax will remain unchanged (as you stated).MarkNYC wrote:Andy,Wagnerjb wrote:If the AMT is allowed to remain as is (meaning no patch for 2012), my additional taxes due to AMT will be $7,800 this year. If they were to allow the state sales tax deduction in 2012 (this expired after 2011), my additional taxes due to AMT would be $9,700 this year.
Are you sure you are stating the result the way you intended? Failure to pass the AMT patch could increase your AMT and your total federal tax by $7,800. But a reinstatement of the sales tax deduction should reduce regular tax by the same $1,900 that it increases AMT, resulting in no net increase in total federal tax as a result of the sales tax deduction?
Said another way - if the sales tax deduction is reinstated for 2012 and AMT is patched for 2012, my total federal income tax burden will be $9,700 lower.
Best wishes.
Andy
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Since mortgage interest on acquisition debt is deductible for both regular tax and AMT, it is not an AMT "culprit." The most common culprits are individual exemptions and 3 exclusion items: (1) state and local taxes, (2) real estate taxes, and (3) miscellaneous itemized deductions, none of which are deductible for AMT.livesoft wrote: We don't have state income taxes nor mortgage interest deduction which are the usual AMT culprits, so I think we are good to go.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Thanks for the correction!
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Chaz |
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“Money is better than poverty, if only for financial reasons." Woody Allen |
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http://www.bogleheads.org/wiki/index.php/Main_Page
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Thanks for the link to the Forbes article. I noticed a link in the article to Turbotax Taxcaster. This online program allows you to toggle the AMT patch "on" vs. "off" to approximate the impact on your taxes if the AMT patch is not enacted for 2012.
http://turbotax.intuit.com/tax-tools/ca ... taxcaster/
http://turbotax.intuit.com/tax-tools/ca ... taxcaster/
We don't know where we are, or where we're going -- but we're making good time.
- interplanetjanet
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Re: The Cliff and AMT - $4000 more in 2012 taxes?
I agree, and would add HOH filing status as the next item in that list - it is effectively an exclusion item for AMT. As a HOH filer I regularly owed AMT even when I only attempted to take the standard deduction.MarkNYC wrote:The most common culprits are individual exemptions and 3 exclusion items: (1) state and local taxes, (2) real estate taxes, and (3) miscellaneous itemized deductions, none of which are deductible for AMT.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
The tax forms are upside down. Just think about how this discussion would be going if every year you first computed your Tentative Minimum Tax and put it on line 44. Then on line 45 you put in the Alternative Regular Tax. The ART would be the difference between your Regular Tax and your TMT, but you would only have to add it on if your Regular Tax was greater than your TMT.
Just think of the discussion we would be having about the dreaded ART and how to avoid it.
Just think of the discussion we would be having about the dreaded ART and how to avoid it.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Well, about 2% of the income tax-related threads here at Bogleheads are about AMT. The other 98% are about how to avoid "the dreaded ART".sscritic wrote:The tax forms are upside down. Just think about how this discussion would be going if every year you first computed your Tentative Minimum Tax and put it on line 44. Then on line 45 you put in the Alternative Regular Tax. The ART would be the difference between your Regular Tax and your TMT, but you would only have to add it on if your Regular Tax was greater than your TMT.
Just think of the discussion we would be having about the dreaded ART and how to avoid it.
Andy
- jeffyscott
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Re: The Cliff and AMT - $4000 more in 2012 taxes?
Taxcaster says income tax for single person with $100k income, taking the standard deduction, would be $18,738, that's 18.74%. Add payroll tax at 5.65% for this year and the total is 24.39%. Add in the additional "employer paid" share of the payroll tax and the total federal tax bill is about $32,0000. With income adjusted to $107,650 (to account for employer share of payroll tax), total rate is nearly 30%.grayfox wrote:Someone making $100,000 per year should be paying $23,000 to cover the cost of all the services from the Federal Goverment they received.
Now, if that income was instead from cap gains and dividends, the tax bill would be only 15%.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Please do not confuse "making $100,000" with $100,000 of income.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Unlike most politicians and the press, who confuse "making" with "income of" with "taxable income of."livesoft wrote:Please do not confuse "making $100,000" with $100,000 of income.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
But a lot of us are confused.sscritic wrote:Unlike most politicians and the press, who confuse "making" with "income of" with "taxable income of."livesoft wrote:Please do not confuse "making $100,000" with $100,000 of income.
Chaz |
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“Money is better than poverty, if only for financial reasons." Woody Allen |
|
http://www.bogleheads.org/wiki/index.php/Main_Page
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Livesoft said please. That's what my mommy taught me to say. Oh, and she taught me to say thank you, too.chaz wrote:But a lot of us are confused.sscritic wrote:Unlike most politicians and the press, who confuse "making" with "income of" with "taxable income of."livesoft wrote:Please do not confuse "making $100,000" with $100,000 of income.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
I can use Taxcaster to give a working couple with 2 kids and $100,000 of wages a $-500 tax bill. Yep, they get $500 back from the IRS and pay nothing in.
The assumptions are not too bad: Contribute $17K each to 401(k)s, $5K each to IRAs, $6.25K to HSA, $2K to health premiums, and $3K loss on investments (I think I wrote that right). Yes, I know they pay FICA and medicare.
Who said the government doesn't encourage saving?
Also please don't let your eyes pop out from my analysis.
The assumptions are not too bad: Contribute $17K each to 401(k)s, $5K each to IRAs, $6.25K to HSA, $2K to health premiums, and $3K loss on investments (I think I wrote that right). Yes, I know they pay FICA and medicare.
Who said the government doesn't encourage saving?
Also please don't let your eyes pop out from my analysis.
Last edited by livesoft on Sat Dec 29, 2012 10:54 am, edited 1 time in total.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Did they get anything to eat?livesoft wrote:I can use Taxcaster to give a working couple with 2 kids and $100,000 of wages a $-500 tax bill. Yep, they get $500 back from the IRS and pay nothing in.
The assumptions are not too bad: Contribute $17K each to 401(k)s, $5K each to IRAs, $6.25K to HSA, $2K to health premiums, and $3K loss on investments (I think I wrote that right). Yes, I know they pay FICA and medicare.
Re: The Cliff and AMT - $4000 more in 2012 taxes?
Food for thought.sscritic wrote:Did they get anything to eat?livesoft wrote:I can use Taxcaster to give a working couple with 2 kids and $100,000 of wages a $-500 tax bill. Yep, they get $500 back from the IRS and pay nothing in.
The assumptions are not too bad: Contribute $17K each to 401(k)s, $5K each to IRAs, $6.25K to HSA, $2K to health premiums, and $3K loss on investments (I think I wrote that right). Yes, I know they pay FICA and medicare.
Chaz |
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“Money is better than poverty, if only for financial reasons." Woody Allen |
|
http://www.bogleheads.org/wiki/index.php/Main_Page
Re: The Cliff and AMT - $4000 more in 2012 taxes?
This thread has run its course and is locked. It's also off-topic. See: Future Tax Rate Questions are Off Topic Until Congress Acts and Forum Policy
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