"jIM" <noreplysoccer[at]hotmail.com> wrote
- quote -

I just ran the numbers with 4 exemptions. You are correct.

The IRS AMT calculator and the Turbotax tax estimator at
http://turbotax.intuit.com/tax-tools/ seem particularly good
for AMT estimating purposes. I bounced what they spew out
against my custom spreadsheet derived from the actual forms
used for computing AMT. There is a bit of vocabulary to
master, but after that, you can experiment yourself with
these online tools and see how far you'd be from AMT.

Aside: The dinkytown calculator is unsatisfactory for
precision with the AMT, since it does not break down one's
itemized deductions, and this step is key to computing the
AMT. But with the previous assumptions, you should not have
to worry about AMT, so the 2008 dinkytown calculator is
still useful. Or you might want to try Turbotax's 2008 tax
estimator, with the usual caveats about tax law changes
occurring during the year.

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On Feb 15, 12:28*pm, "Elle" <honda.lion...[at]nospam.earthlink.netwrote:
- quote -

family is going from two people (wife and I) to 4 people (wife,myself,
twin boys). 4 exemptions, not 6. But still appears to be far from
AMT in using the math you present.

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"jIM" <noreplysoccer[at]hotmail.com> wrote
On gross income etc. triggering AMT:
- quote -

Is that after 401(k) contributions have been subtracted? If
so, then I am computing as follows, using the 2007 online
calculators at the IRS site and Turbotax and my own AMT
spreadsheet (based on Form 6251). All yield the same result
regarding AMT.

Input for Form 1040:
Line 38 = 120,000 = AGI
Line 40 = 28,000 = Itemized Deductions
Line 41 = 92,000 = AGI - Item'd Deductions
Line 42 = 20,400 = 6 Exemptions * 3400 (using next year's
kids)
Line 43 = 71,600 = Taxable income
Line 44 = 10,748 = Regular Income Tax

Input for Schedule A:
Line 9 = 8,000 = "taxes you paid" (property and/or sales
taxes)
Line 15 = 20,000 = home mortgage interest in this case

Output:
No AMT owed.

Repeating this with higher Line 7 incomes shows your income
can rise to at least $156,400 before things start to get
messy. Albeit it's only a tad messy.

For 2008, and as long as there are no major changes to the
basic data you provided, and assuming Congress again passes
a one-year AMT patch with an AMT exemption of around $66k,
then you are far from having to owe the AMT.

One reason you are so far from being in AMT territory with
these assumptions is that the AMT tax rate is large but with
a large exemption amount ($66,250), whereas your regular
income tax rate is small but with a much smaller exemption
($20,400 for six people in the family). The taxes computed
using either are very close at higher incomes.

As a check on the discussion here, I would consider
repeating some of your questions at misc.tax.moderated.

Tad's right that you do have to roll the dice on what
Congress does next year. But if history is any guide, and
based on all else you say, I would expect it to be unlikely
you will land in AMT territory. We are rolling the dice on a
lot of other aspects of tax law, besides.

Two cents.

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- quote -

Elle- can you elaborate on this with a combined gross income of around
120k.

Thx.

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"Elle" <honda.lioness[at]nospam.earthlink.net> wrote
- quote -

Add two others:

3.
For 2007, I estimate jIM could have up to nine kids and
still not owe AMT. It's true the exemptions (himself, wife,
kids * $3400 each) lower his regular income tax. But the
2007 AMT exemption of $66,250 is so large that even with as
many as 11 exemptions he is still not in AMT territory.
Similarly for 2008, I expect his six exemptions (four kids,
wife, himself) will also not come close to incurring the
AMT.

4.
jIM and wife are contributing 11% and 6% respectively of
their wages to
to 401(k)s. This will help keep him out of AMT territory,
though even if he did not contribute to the 401(k) nor to a
Traditional IRA, he would still be well out of AMT
territory.

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