On behalf of Silver Tax Group posted in Back Taxes on Thursday, April 27, 2017.
For decades, the alternative minimum tax has been a source of contention for taxpayers in Michigan and across the country. While the aim of the AMT was originally to target extremely wealthy taxpayers, it has been under criticism for impacting upper-middleclass taxpayers instead.
What is AMT
Ironically, the AMT appears not to have served its function concerning wealthy taxpayers. The wealthiest of taxpayers use other tax-avoidance strategies to shelter earnings from taxation.
A prior version of the AMT came about in the late 1960s over concerns that individuals were claiming deductions to avoid paying federal income taxes. Individuals took these deductions while also failing to include certain types of income on their tax forms. A newer version of the AMT came into being in 1982. The AMT has gone through a variety of modifications since that time.
Under the Trump administrations recent proposal, the AMT would face repeal. Arguably, President Trump favors repeal because the AMT cost him $31 million out of the $38.5 million he paid in taxes in 2005. But whether such repeal will actually occur is debatable. The Tax Policy Center estimates such repeal would cost the federal government $412.8 billion.
The debate over the AMT demonstrates why it is important to keep informed regarding changes to the tax code. Many middleclass taxpayers are supporting families and hope to send their children to college. Also, having an understanding of current tax proposals allows families to plan for the future and meet their financial goals.
What should you do?
Unfortunately, tax regulations are so legally complex that the guidance of an experienced tax attorney may badly be needed. Taxes can prevent individuals from contributing financial support for their families.