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Friday, January 29, 2010

TAX TALK: WHY IS THE ALTERNATIVE MINIMUM TAX LIKE MAD COW DISEASE?

By JC Leahy
Maximum Legal Refund (TM)
Income Tax Preparation and Consulting
Silver Spring, Maryland

For help  preparing your income tax returns, email: maxlegalrefund@yahoo.com

The Alternative Minimum Tax is like Mad Cow Disease because you can't tell for sure if you're affected without performing an autopsy. The Alternative Minimum Tax (AMT) is a completely different income tax system created by Congress to quietly take back tax benefits to which people think they are entitled under the regular income tax system. This is like sneaking back at night to quietly steal the gift you gave earlier in the daytime.  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, 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 get to pay. It's the patriotic thing to do, as Vice President Joe Biden would say.   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 the sound of this, Email your congressman (addresses at https://writerep.house.gov/writerep/welcome.shtmlhttps://writerep.house.gov/writerep/welcome.shtml) and assert that you want to repeal the Alternative Minimum Tax.  You can also telephone them with area code 202 and the number listed at http://www.mass.gov/legis/memmenuh.htmhttp://www.mass.gov/legis/memmenuh.htm. And  for goodness sake, VOTE!

Meanwhile if you need professional assistance with your own income taxes, contact Maximum Legal Refund (TM), Silver Spring, Maryland, at maxlegalrefund@aol.com  .

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