Don't Mess With Taxes

Before law changes, the now inflation-indexed Alternative Minimum Tax, known as the AMT, seemed to work like an ATM for the U.S. Treasury. When the AMT was created in 1969 to ensure wealthy individuals paid at least some tax, it wasn't indexed for inflation. Until that changed with the 2017 tax reform law, the AMT adversely affected a lot of less-wealthy taxpayers. (Photo by Ali Mkumbwa on Unsplash) What's worse than figuring your tax bill? Having to figure a second, higher, parallel amount you might owe. That's a situation that taxpayers who owe the Alternative Minimum Tax, or AMT, end... Read more →

Donald J. Trump posted this photo in 2016 on Twitter, saying it represented the size of his tax return filing. When we got a glimpse of Donald J. Trump's federal 2005 tax year filing back in 2017, one thing was very clear. Trump's personal tax situation is why during his initial presidential campaign he called for the elimination of the federal Alternative Minimum Tax (AMT). The New York Times' recent exposé of more than two decades of Trump tax information, underscores his adversarial relationship with this parallel tax system. In the few years that Trump did pay federal income tax,... Read more →

Welcome to Part 7 of the ol' blog's series on 2018 inflation adjustments. Today we look at changes to the Alternative Minimum Tax exemption amounts and next year's Social Security wage base. You can find links to all 2018 inflation posts in the first item: Income Tax Brackets and Rates. Note: The 2018 figures apply to 2018 tax returns that are due in 2019. For comparison purposes, you'll also find 2017 amounts to be used in filing 2017 tax returns due next April. When you're hit by the AMT, or Alternative Minimum Tax, you might be tempted to rearrange the... Read more →

House Ways and Means Chairman Rep. Kevin Brady of Texas, surrounded by his Republican colleagues, displays a postcard tax return his Party says will be possible under the tax reform framework released today. (Screenshot of C-SPAN video; click image to watch tape.) And so tax reform 2017 begins. Unfortunately, it begins vaguely. The Republican Party today released its "Unified Framework for Fixing Our Broken Tax Code." That long title, which is in dramatic all capital letters on cover of the nine-page document, belies the amount of information it provides. In fact, there are fewer tax details in this latest GOP... Read more →

Are we having tax fun yet? We did for while last night when it looked like we finally might get a look at Donald J. Trump's taxes. OK. We did get to see part of the new president's 2005 tax return, courtesy tax journalist David Cay Johnston and MSNBC host Rachel Maddow. MSNBC hosts Rachel Maddow and Chris Hayes talk Trump taxes on March 14 with Pulitzer Prize winning tax journalist David Cay Johnston. (Click screenshot to view a segment of the Maddow show.) Trump tells tax all? The tax return provides some basic info, but raises a lot more... Read more →

Welcome to Part 7 of the ol' blog's series on 2017 inflation adjustments. You can find links to all 2017 inflation posts in the series' first item: Income Tax Brackets and Rates. Today we look at changes to the Alternative Minimum Tax exemption amounts, as well as the previously announced increase in the Social Security wage base. Note: The 2017 figures apply to 2017 returns that are due in 2018. For comparison purposes, you'll also find 2016 amounts to be used in filing 2016 returns due next April. The AMT, or Alternative Minimum Tax, forces some taxpayers to do extra... Read more →

The Browns are in Pittsburgh today. That's good news for Cleveland tax officials. On this given Sunday, they don't have to worry about taxing visiting National Football League players. Cleveland officials are revising their jock tax system, through which they've collected money from athletes and entertainers who've come into town to perform over the years. The city lost a court battle over its jock tax methodology and could end up refunding, by one estimate, as much as $2.4 million to previously taxed NFL players. Before it was challenged, Cleveland had taken its tax portion from visiting pro footballers' pockets based... Read more →

Forty-four years ago a new tax system was created to ensure that the wealthy paid at least some tax. It wasn't necessarily a bad idea, but the newly created alternative minimum tax (AMT), had a major flaw. It was not indexed for inflation. That meant that as years went by and incomes increased, more people who weren't rich got caught in the AMT's trap. To determine if you must pay the AMT, you have to figure your ordinary tax bill and then calculate the AMT damage, which could be substantial because some major breaks, such as state and local income... Read more →

Assume crash positions, people. We are going over the fiscal cliff. The Senate is still working on a proposal to deal with the expiring/expired tax provisions that are part of the fiscal cliff. The House, however, has called it a day. Regardless of what the Senate might do later today, the House will vote on it tomorrow at the earliest. So technically, we're all part of the Wyle E. Coyote cartoon family, dropping helplessly into a financial canyon. Cliff jump courtesy surfbunny.tumblr.com.. Realistically speaking, it won't matter that much if the final tax deal is done at 11:59 p.m. tonight... Read more →

Don't get too excited, but there appears to be some optimism that a fiscal cliff deal might be near in advance of a mid-afternoon White House meeting with Senate and House leaders. I'm not going to get into blow-by-blow reporting of the negotiations, but it seems that as is too often the case in Washington, D.C., lawmakers might be coming to terms -- and their senses -- on a last-minute deal to stave off the implications of the Jan. 1, 2013, fiscal cliff deadline. OK, picky calendar watchers, the real effective date is Jan. 2, since that's the first business... Read more →

Is your NFL team losing? Simply bored with the games on in your area? Then it's the perfect time to watch National Taxpayer Advocate Nina Olson discuss the fiscal cliff and what it means to taxpayers. Olson's remarks were made last week when she was a guest on C-SPAN's Washington Journal. As part of the discussion, Olson discussed three fiscal cliff components: Higher individual tax rates and the effect on payroll withholding, both for taxpayers and employers; Extenders, the tax laws that have expired (this last time at the end of 2011) but that are generally reauthorized, or extended (sometimes... Read more →

As 2012 winds down taxpayers need to pay attention to a lot of things. Two year-end issues were the focus last week at my other tax blog. Holiday shopping season is prime identity theft time. But the personal information purloined now could also pose problems at tax-filling season. Some crooks hang onto that purloined financial info obtained now and use it to file a fake tax return in your name the following year. If that happens, you then get to spend all your free time convincing the Internal Revenue Service that both of you were victims of tax fraud. Another... Read more →

Would you be more inclined to pay your overdue tax bill if the Internal Revenue Service was able to report your tax delinquency to the national credit reporting agencies? That's one of the questions asked in a recent Government Accountability Office, or GAO, report about such a possibility. In its report to the chairman and ranking member of the Senate Finance Committee, the GAO noted that millions of people owe billions of dollars -- $258 billion in fiscal year 2011 alone -- and that the IRS spends substantial resources, both in dollars and personnel, trying to collect the overdue taxes.... Read more →

Whoa! Just what is in the water on the Senate side of Capitol Hill? Before the upper chamber left for its annual August recess, its members agreed to let both Democrats and Republicans present their tax cut bills. That was a marked change from the Senate's usual tendency to hold legislation hostage to its 60-vote super majority procedural rule. FYI, the Dems' version won. That was followed by a bipartisan vote in the Senate Finance Committee to move along a proposal to reinstate many tax breaks that had expired on Dec. 31, 2011. If we can figure out exactly what... Read more →

Happy Easter! I hope your kids had successful Easter egg hunts. After you finish making egg salad of the colorfully shelled collection, check out Today's Tax Tip special holiday edition: A dozen egg-cellent tax filing tidbits. Photo courtesy Nestlé/Juicy Juice 1. You counted the payments you made to your regular day care provider toward the child and dependent care credit. But did you add in the costs of the day camp the kiddos attended last summer? It can be used toward this popular tax credit, too. 2. If you took advantage of low home loan rates to refinance your mortgage,... Read more →

Last night I completed a quick mock 2010 tax return to see if the hubby and I should pay our property taxes this week to bump up our itemized deductions. In addition to offering guidance on the end-of-year tax moves we should make, the draft tax numbers also provided the good news that we won't face the alternative minimum tax (AMT). As a general rule, if your 2010 year-end projection indicates that you're likely to owe AMT, that situation will change your year-end tax strategy. Basically, it won't be worth it for folks facing the AMT to pay some expenses... Read more →

Here's today's not news flash. The House this afternoon wasted dwindling legislative time voted 234 to 188 for legislation to extend some of the expiring Bush tax cuts. The bill now goes to the Senate where it will die. The vote, engineered by Democrats in the waning days of their control of the House, OKs only middle-class tax cuts. The tax rates for families earning more than $250,000 annually and individuals making more than $200,000 a year will go up on Jan. 1. The Senate, however, won't be able to duplicate the House's approval. In the upper legislative body, Republicans,... Read more →

The Bush tax cuts that expire Dec. 31 are the "Marcia, Marcia, Marcia" of tax legislation. Everyone is fixated on what individual income tax rates will be in 2011. But more pressing, says the head of the Internal Revenue Service, are the laws that have already been stricken from the tax code. Lawmakers swear they'll get to the lapsed tax laws. And I'm sure they will. Eventually. But it's the precise timing of reinstated tax laws that could pose big problems for the IRS and, in turn, for us taxpayers. Concerned Commissioner: In identical letters sent Dec. 1 to the... Read more →

What to do about the alternative minimum tax, or AMT, is among the outstanding tax matters that Congress needs to deal with during the lame duck session that began yesterday. Although this costly parallel tax is complicated, the short-term solution isn't. Lawmakers can simply enact a patch to account for inflation and increase the amount of income (per filing status) that's exempt from the AMT. Without the patch, more and more taxpayers -- most of them what we consider middle-class -- could end up owing the greater alternative tax amount. When the last patch expired, 2010 AMT income exemption amounts... Read more →

Are you as excited as I am that Congress will be back at work next Monday, Nov. 15? Mark your calendars! Program C-SPAN as one of your TV remote's favorite channels! Really, Representatives and Senators swear they're going to work during this lame duck session. That, unlike all the other months, they'll actually get some bills to the White House for signature. However, gridlock is as just as likely. But, hey, I'm trying to be optimistic because that's just who I am (today, at least). And that roar of laughter you hear across the blogosphere is from the hubby. Anyway,... Read more →