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Sunday, August 2, 2009

HOW IS THE ALTERNATIVE MINIMUM TAX LIKE MAD COW DISEASE?

This question was asked by Dr. Reuben B, a practicing surgeon in Washington, DC. He phrased it a little differently: "What is the Alternative Minimum Tax and does it affect me?"

ANSWER:Dr. B, the Alternative Minimum Tax is like Mad Cow Disease because you can't tell for sure if you're affected without performing an autopsy. Believe it or not, the Alternative Minimum Tax (AMT) is a shadowy, alternative income tax system created by Congress to quietly take back a large slew of tax benefits to which people think they are entitled under the regular income tax system. This is very much like sneaking back at night to steal a gift that you gave during the day. In recent years, millions of mostly middle class taxpayers have been affected. The problem is so severe that the Emergency Economic Stabilization Act of 2008 included a provision to allow millions of middle-class taxpayers to escape from the Alternative Minimum Tax - for one year only.

Like Mad Cow Disease, Dr. B., there is no conclusive screening test to determine whether you are affected. You literally have to figure your income tax liability under BOTH income tax systems. Then, whichever comes out higher is what you, as a patriotic American, get to pay. The complexity introduced by the Alternative Minimum Tax goes a long way towards ensuring that the average American is unable to fill out his own tax return without resorting to a computer program and/or a tax consultant.

The list of tax write-offs disallowed under the Alternative Minimum Tax is really quite long. It includes even basic things like all of the personal exemptions for you and your entire family, the standard deductions of the taxpayers who don't itemize, the deduction for medical expenses of sick Americans, some charitable contributions, some home mortgage interest, the deduction for taxes paid to your State, and just about all of your miscellaneous itemized deductions such as investment expenses, tax preparation fees, and un-reimbursed employee expenses. The list of disallowed items really goes on and on.

If you don't like this, Email your congressman at https://writerep.house.gov/writerep/welcome.shtml and say that you want to either repeal the Alternative Minimum Tax or the regular income tax -- and keep the other. Or telephone them with area code 202 and the number listed at http://www.mass.gov/legis/memmenuh.htm. Consider calling whatever talk radio show you like. For example, Rush Limbaugh is at 1-800-282-2882.

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