Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
AMT question
Old 07-11-2017, 02:18 PM   #1
Full time employment: Posting here.
 
Join Date: Oct 2014
Posts: 730
AMT question

DW and I are over the limit and are suppose to participate in AMT. What I do instead is check "married but at the higher single rate" and also withhold additional $ each month. Is that acceptable? The IRS is getting their fair share (and a little extra) every month. I miscalcualted a bit last year and received some cash back. I have adjusted withholding so should be right on for 2017. So the question is: Will I get in trouble for not sending in quarterly AMT payments despite withholding plenty each month?
__________________

__________________
-Big Dawg-FI since 9/2010. Failed ER in 2015. New target 2020.-

-"Blow that dough"-Robbie

" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
Bigdawg is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-11-2017, 02:28 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Mar 2017
Location: New York City
Posts: 2,838
I owe the AMT every year. Its not a separate tax, its part of the federal. When you set up your quarterly payments it was figured in, If you have substantially more income this year then last, you might owe a few bucks. I get slapped around in penalties every year, this is the first time Im sending in quarterly payments, Im trying to avoid last years 544 in penalties.
__________________

__________________
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
Blue Collar Guy is offline   Reply With Quote
Old 07-11-2017, 02:31 PM   #3
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 2,417
Me too. It's just a way for the government to make sure high earners don't get to take too many deductions. There is no requirement to pay anything quarterly.
Ready is offline   Reply With Quote
Old 07-11-2017, 02:48 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 5,049
I'm confused. Are you talking Alternative Minimum Tax? Or Estimated Quartly Payments? Or both?

If you are talking estimated payments, and you somehow instead made the payments happen on a regular basis through payroll withholding, you are OK.

Not sure what you mean by quarterly amt payments. If AMT is causing you to have to withhold more, what you are doing is fine.
JoeWras is offline   Reply With Quote
Old 07-11-2017, 02:52 PM   #5
Full time employment: Posting here.
 
Join Date: Oct 2014
Posts: 730
Quote:
Originally Posted by JoeWras View Post
I'm confused. Are you talking Alternative Minimum Tax? Or Estimated Quartly Payments? Or both?

If you are talking estimated payments, and you somehow instead made the payments happen on a regular basis through payroll withholding, you are OK.

Not sure what you mean by quarterly amt payments. If AMT is causing you to have to withhold more, what you are doing is fine.
This. Thanks JoeWras.
__________________
-Big Dawg-FI since 9/2010. Failed ER in 2015. New target 2020.-

-"Blow that dough"-Robbie

" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
Bigdawg is offline   Reply With Quote
Old 07-11-2017, 05:56 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 23,552
Quote:
Originally Posted by Bigdawg View Post
DW and I are over the limit and are suppose to participate in AMT. What I do instead is check "married but at the higher single rate" and also withhold additional $ each month. Is that acceptable? The IRS is getting their fair share (and a little extra) every month. I miscalcualted a bit last year and received some cash back. I have adjusted withholding so should be right on for 2017. So the question is: Will I get in trouble for not sending in quarterly AMT payments despite withholding plenty each month?
If you pay 90% of what you owe including the AMT by withholding in 2017, I think you will be OK.

Otherwise, if you are short, you will pay penalty on a hopefully small difference.

The only way to be sure is to withhold enough that it matches last years total taxes, times 110% if your income is >$150K. You can change your withholding and catch up during the year I think.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 07-11-2017, 06:07 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Mar 2017
Location: New York City
Posts: 2,838
Quote:
Originally Posted by audreyh1 View Post
If you pay 90% of what you owe including the AMT by withholding in 2017, I think you will be OK.

Otherwise, if you are short, you will pay penalty on a hopefully small difference.

The only way to be sure is to withhold enough that it matches last years total taxes, times 110% if your income is >$150K. You can change your withholding and catch up during the year I think.
+1
__________________
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
Blue Collar Guy is offline   Reply With Quote
Old 07-11-2017, 07:05 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Apr 2011
Posts: 2,687
Quote:
Originally Posted by Blue Collar Guy View Post
I owe the AMT every year. Its not a separate tax, its part of the federal.
I would describe it more as a parallel system to the regular income tax system & whichever causes the government the most benefit, you pay. Since overwhelmingly most don't owe more by the AMT version, overwhelmingly most don't even know about it.
gerntz is offline   Reply With Quote
Old 07-11-2017, 08:24 PM   #9
Full time employment: Posting here.
 
Join Date: Oct 2014
Posts: 730
Quote:
Originally Posted by audreyh1 View Post
If you pay 90% of what you owe including the AMT by withholding in 2017, I think you will be OK.

Otherwise, if you are short, you will pay penalty on a hopefully small difference.

The only way to be sure is to withhold enough that it matches last years total taxes, times 110% if your income is >$150K. You can change your withholding and catch up during the year I think.
Just hard to pin it all down. 2013 was last year active duty. 2014 first year out of the service working as contractor-taxes went way up. 2015 took 8 months off-taxes way down again. 2016 raise and back to work for the full year-taxes way up. 2017 selling 2 properties both at a loss-?? 2018 selling one property at a huge gain-?? So many ups and downs. Final ER sometime between now and 2020-?? Roller coaster. It's all positive it is just that I would hate to have to pay the irs a penalty.
__________________
-Big Dawg-FI since 9/2010. Failed ER in 2015. New target 2020.-

-"Blow that dough"-Robbie

" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
Bigdawg is offline   Reply With Quote
Old 07-11-2017, 08:36 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 5,049
Quote:
Originally Posted by Bigdawg View Post
Just hard to pin it all down. 2013 was last year active duty. 2014 first year out of the service working as contractor-taxes went way up. 2015 took 8 months off-taxes way down again. 2016 raise and back to work for the full year-taxes way up. 2017 selling 2 properties both at a loss-?? 2018 selling one property at a huge gain-?? So many ups and downs. Final ER sometime between now and 2020-?? Roller coaster. It's all positive it is just that I would hate to have to pay the irs a penalty.
Yeah, I know, the penalty stinks. Follow audrey1's advice and make whatever you are doing be 110% of last year, and there's no possible penalty. Doing that through payroll withholding is OK.

I've flipped back and forth between having extra from my check each pay period, and in other years paying estimated quarterly payments. The estimated payments gives you flexibility. For example, if you have a large gain on a property in the final quarter of the year, you can pay it that quarter. BUT, it is also easy to botch up. By doing it with your paycheck, it is automatic. BUT, you may way overpay if you use the 110% rule.

You'll just have to find your way on this. In this minimal interest environment, I haven't cared too much for overpaying, so I've been pretty conservative. Last year I just rolled over my overpayment (unfortunately large) right on my tax form and it is essentially my estimated payments for this year. With interest rates now finally rising (see other threads), I'm going to try to cut it closer and not give the IRS/USA a free loan.
JoeWras is offline   Reply With Quote
Old 07-11-2017, 08:59 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 23,552
Quote:
Originally Posted by gerntz View Post
I would describe it more as a parallel system to the regular income tax system & whichever causes the government the most benefit, you pay. Since overwhelmingly most don't owe more by the AMT version, overwhelmingly most don't even know about it.
His point is that it is all paid as one thing, there is no separate payment for the AMT. Withholding or estimated taxes has to include any additional amount due to AMT.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 07-12-2017, 10:19 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Apr 2011
Posts: 2,687
Quote:
Originally Posted by audreyh1 View Post
His point is that it is all paid as one thing, there is no separate payment for the AMT. Withholding or estimated taxes has to include any additional amount due to AMT.
Yes, that's why I wrote what I wrote.

There are two separate systems, regular & AMT, that are calculating your taxes & you pay the higher one. The "AMT effect" is when you pay more than the regular system only demands, but the whole amount you pay not just the differential, is AMT. That's why it's call Alternative, not something like Additional.
gerntz is offline   Reply With Quote
Old 07-12-2017, 11:23 AM   #13
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 3,900
Quote:
Originally Posted by gerntz View Post
Yes, that's why I wrote what I wrote.

There are two separate systems, regular & AMT, that are calculating your taxes & you pay the higher one. The "AMT effect" is when you pay more than the regular system only demands, but the whole amount you pay not just the differential, is AMT. That's why it's call Alternative, not something like Additional.
Actually, I think it should be called Additional which would be less confusing.
Most folks, including myself, think about the AMT the same way as you do.
However , the technical IRS name for what we think of as AMT is really TMT
(tentative minimum tax). And the IRS definition of AMT is the difference
between TMT and regular tax (the additional tax).

You can verify this from forms 1040 p.2 and 6251.
kaneohe is offline   Reply With Quote
Old 07-12-2017, 12:47 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 5,049
Quote:
Originally Posted by kaneohe View Post
Actually, I think it should be called Additional which would be less confusing.
Most folks, including myself, think about the AMT the same way as you do.
However , the technical IRS name for what we think of as AMT is really TMT
(tentative minimum tax). And the IRS definition of AMT is the difference
between TMT and regular tax (the additional tax).

You can verify this from forms 1040 p.2 and 6251.
True. Leave it up to IRS and Congress to confuse the daylights out of everything.

I've had discussions with people at w*rk who are on a quest to do everything and anything to get out of AMT. I ask why, and they really don't know. They just "heard it was really, really bad."



I mean, it isn't fun or anything, and sometimes you should be smart to avoid it in certain circumstances (state tax withholding is one good complication to think about), but this all-out quest to rid oneself of AMT any any cost is just blindsided thinking. Maybe I should tell them to quit and get rid of income streams.

Note to OP: not talking about you, I'm talking about co-w*rkers.
__________________

JoeWras is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Last minute AMT question outtarentals FIRE and Money 3 12-30-2007 08:32 PM
I'm in AMT Hell - anyone understand how to recover AMT Credit from ISO exercise? JB FIRE and Money 4 04-14-2007 10:39 AM
ISO Stock Options and AMT triplane FIRE and Money 2 01-12-2006 01:40 AM
AMT Information cube_rat Young Dreamers 22 11-11-2005 08:36 AM
AMT gratefuled Other topics 6 04-15-2005 11:21 AM

» Quick Links

 
All times are GMT -6. The time now is 05:12 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.