Chris wrote:

- quote -

Can't answer your question just based on those facts.

However, look to the deductions, particularly the
difference and types of deductions for each year.

ChEAr$,
Harlan Lunsford, EA n LA

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"Chris" <furtherside[at]yahoo.com> writes:

- quote -

Did anything change on the expense side? Did his property
taxes go up (they aren't deductible under the AMT)? Did he
take out a 2nd mortgage for reasons other than to acquire or
improve a home (if not, that interest isn't deductible under
the AMT)? Did he take new credits in 2005 that are not
allowed under the AMT? Did he have a new kid? Personal
exemptions aren't allowed under the AMT. Did he move to a
state with a higher state income tax (state and local income
taxes aren't deductible under the AMT)?

He should look at his filled-out Form 6251 and see what sort
of things are being added back into his income in the AMT
calculation. And compare that to his 2004 Form 6251. And
look at the "tentative minimum tax" line on both years'
6251s.

He should also look at a more meaningful number that that
"AMT" line -- the change from 2004 to 2005 in the "Total
Tax" line of Form 1040.

It is necessary to point out that the "AMT" line on Form
1040 is very misleading. It's not a real number. It is
simply the additional amount above your regular tax (RT)
that needs to be added to make your total tax equal to the
tentative minimum tax (TMT) computed on 6251. In other
words, that AMT line is the difference between the TMT and
RT.

So there are many ways that AMT line can increase. The TMT
could stay constant but the RT could drop. The RT could
stay constant but the TMT could rise. They could both drop
with RT dropping faster. They could both rise, with TMT
rising faster, etc.

- quote -

No, it shouldn't. Taxes withheld have nothing to do with
tax liability. They are just an estimated pre-payment of
what you'll think you owe. Not having enough withheld will
affect how big a check you have to write on April 15. It
doesn't affect what your actual, total taxes are.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Asking a question for a friend of mine. Last year, he paid
about $500 in AMT. This year, the calculation is coming out
at around $3500 in AMT. Both years were done using
TurboTax.

Almost all of his income is W2, which increased modestly
from 2004 to 2005. Some dividend payments from
stocks/mutual funds and maybe some small capital gains
(again, no big difference from 2004 to 2005).

Is there something fundamental about AMT that would cause it
to so dramatically increase YTY -- or does something sound
wrong about this? Any increases in W2 had taxes coming out
all year according to W4, so that should scale, right? Or
is it that once you get on the AMT bandwagon, any new income
that materializes is just naturally "shifted" from regular
tax to the AMT basis?

Any help understanding this would be very appreciated!

Thanks,
Chris

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >