Personal finance columnist Sandra Block.
The Alternative Minimum Tax was originally designed to ensure that ultra-wealthy taxpayers don't evade taxes through excessive deductions. But now it is hitting a growing number of middle-income families. And with a rate that hovers from 26 to 28 percent, the AMT can severely alter a tax return.
Taxpayers at or below these qualifications for 2004 are exempt from the Alternative Minimum Tax:
- $58,000 -- Married, filing a joint return
- $58,000 -- Qualified widows and widowers
- $40,250 -- Single or head of household
- $29,000 -- Married, filing separately
While the tax itself is fairly obscure to the American public, some of its rules — and how it works — are even murkier to many taxpayers. It remains to be seen what Congress and the IRS can do to improve the program. NPR's Steve Inskeep talks with Sandra Block, personal finance columnist for USA Today.
If you meet one or more of these descriptions, you may be especially vulnerable to the AMT:
- Those claiming large deductions
- Those making more than $80,000
- Those who exercised large stock options
- Anyone whose AMT is higher than their normal tax