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From Taxpolicycenter.org: (This was for 2017 but the principle is the same)
A.The individual alternative minimum tax (AMT) primarily affects well-off households, but not those with the very highest incomes. It is also more likely to hit taxpayers with large families, those who are married, and those who live in high-tax states.
Taxpayers pay the higher of either their tax calculated under regular income tax rules or their tax calculated under the alternative minimum tax (AMT) rules. Because the 39.6 percent top rate under the regular income tax is higher than the 28 percent top statutory AMT rate, households with very high incomes who do not attempt to shelter much income typically pay based on the regular income tax system. Households that are not at the very top but still have relatively high incomes face somewhat lower statutory tax rates under the regular tax and are therefore more likely to pay the AMT.
In 2017, 29.4 percent of households with “expanded cash income” (which is a broad measure of income) between $200,000 and $500,000 will be affected by the AMT (table 1). That number rises to 62.9 percent for those with incomes between $500,000 and $1 million. In contrast, only 19.9 percent of households with incomes greater than $1 million will be on the AMT.
This typically will apply to people who make their money through salary, bonus and stock options. This is all W-2 income and since they don't have a business, there aren't very many deductions. The whole purpose of the AMT was to make sure people who took a lot of deductions paid a rate floor.
we hit the amt whenever we sell off some real estate . last time we hit it was prior to retiring in 2014.
looking at our taxes for the year we sold the lease rights , i show total income including the gain on the lease rights of 461,136.00
bottom line federal taxes were 89,387 , new york state taxes 28,604 and nyc taxes 15,021.00. there was a 16k amt adder in that total . .
133,000 in taxes . i think that is 29% plus more in amt the following year .
there was an additional amt penalty due again the following year , even though our incomes were nothing special because the large state and local taxes tripped it again on deductions this time . so the amt was tripped again on a way way lower income based on deductions this time .
According to your link, 19.9% of households with incomes over $1million pay AMT. At what income level do they stop paying AMT? Your quote doesn't address your claim.
"According to the Tax Policy Center, about 2% of 2017 tax returns with income in the $100,000-$200,000 range will be affected by the AMT. For households in the $200,000-$500,000 income range, many of which could be considered middle-income in high-cost areas of the U.S., 29.4% of tax returns are expected to be affected."
According to your link, 19.9% of households with incomes over $1million pay AMT. At what income level do they stop paying AMT? Your quote doesn't address your claim.
In 2017, 29.4 percent of households with “expanded cash income” (which is a broad measure of income) between $200,000 and $500,000 will be affected by the AMT (table 1). That number rises to 62.9 percent for those with incomes between $500,000 and $1 million. In contrast, only 19.9 percent of households with incomes greater than $1 million will be on the AMT.
Do you agree that a lower percentage of people pay AMT making over $1m?
In 2017, 29.4 percent of households with “expanded cash income” (which is a broad measure of income) between $200,000 and $500,000 will be affected by the AMT (table 1). That number rises to 62.9 percent for those with incomes between $500,000 and $1 million. In contrast, only 19.9 percent of households with incomes greater than $1 million will be on the AMT.
Do you agree that a lower percentage of people pay AMT making over $1m?
Yes, I agree. But that wasn’t your claim that I took issue with.
what sucked is in high tax states it was so easy to hit the amt the year after you had a large capital gain if you paid all that tax when you filed and settled up . that large payment acted as a deduction the following year . .
that big deduction even on a much lower income tripped it for us time and time again .
to make matters worse the year we sold , we saw the capital gains tax jump from 15% to almost 24% on that amount . so kicking the tax can down the road is not always a good thing . delaying the sale one year cost us a lot of extra money in taxes ,.
what sucked is in high tax states it was so easy to hit the amt the year after you had a large capital gain if you paid all that tax when you filed and settled up . that large payment acted as a deduction the following year . .
that big deduction even on a much lower income tripped it for us time and time again .
to make matters worse the year we sold , we saw the capital gains tax jump from 15% to almost 24% on that amount . so kicking the tax can down the road is not always a good thing . delaying the sale one year cost us a lot of extra money in taxes ,.
Even in a low tax state taking notable capital gains and having a moderate amount of various deductions can trigger AMT that are staggering in my view. We got hit and adjusted our approach to restructuring our portfolio as a result.
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