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Alternative Minimum Tax

The alternative minimum tax, or AMT, is a parallel tax system that was originally intended to prevent higher income individuals from benefiting from many of the tax deductions that lower income individuals are entitled to receive.  By parallel, think of the AMT as a separate tax system that may apply to taxpayers with higher incomes and a lot of deductions.

Originally set up as a way to plug loopholes that benefit affluent taxpayer's, the AMT was created, but because it was not properly adjusted for inflation, what was considered wealthy when the AMT began is now beginning to hit the upper-middle class.  In other words, each year people who mak less money find that the AMT applies to them.

Taxpayers who think they might be affected by the AMT should fill out IRS Form 6251.  Failure to pay the AMT could subject a taxpayer to fines imposed by the IRS if a tax return is ever examined in an IRS audit.

If the AMT affects a trucker, then itemized tax deductions that the truck driver may have incurred will not help that year because the AMT tax will need to be paid instead.  That means an trucker's employee business expenses and per diem deduction don't result in a lower tax liability because those are components of the itemized deductions for a truck driver.

If the AMT affects a taxpayer in a given year, the taxpayer may get tax credit for it in future years.


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