tryan
Thinks s/he gets paid by the post
- Joined
- Mar 25, 2005
- Messages
- 2,604
Just did my annual visit to my accountant yesterday. So I peppered him with questions about ALTMIN. Here’s what I learned –
ALTMIN was designed to close tax loop holes the wealthy were exploiting. Idea is to calculate your taxes two ways if a given taxable threshold is met and have the taxpayer pay the higher tax. For 2006 this threshold is $62,500 for couples and $42,500 for singles. The ALTMIN tax rate is 26%.
Paying 26% sounds like a bargain when the highest rate is 35% … BUT when the ALTMIN rate is calculated several standard deductions are given back. Here’s a PARTIAL list of the standard deductions which are taxed under the ALTMIN calculation:
• ISO (incentive stock options)
• State and Local taxes
• Property taxes (primary residence and vacation homes)
• Dependents/Children
• Home Equity loan interest (if the $$ was not used for home improvements)
Twice I asked if any deductions from a schedule E are given back (e.g. rental property taxes or loan interest); twice he said “no”.
He went on to tell some funny/sad stories about dot-com “millionaires” who were taxed on options ($500k in one case) which were ultimately worthless and a guy with 14 kids who gets hit with ALTMIN every year.
ALTMIN was designed to close tax loop holes the wealthy were exploiting. Idea is to calculate your taxes two ways if a given taxable threshold is met and have the taxpayer pay the higher tax. For 2006 this threshold is $62,500 for couples and $42,500 for singles. The ALTMIN tax rate is 26%.
Paying 26% sounds like a bargain when the highest rate is 35% … BUT when the ALTMIN rate is calculated several standard deductions are given back. Here’s a PARTIAL list of the standard deductions which are taxed under the ALTMIN calculation:
• ISO (incentive stock options)
• State and Local taxes
• Property taxes (primary residence and vacation homes)
• Dependents/Children
• Home Equity loan interest (if the $$ was not used for home improvements)
Twice I asked if any deductions from a schedule E are given back (e.g. rental property taxes or loan interest); twice he said “no”.
He went on to tell some funny/sad stories about dot-com “millionaires” who were taxed on options ($500k in one case) which were ultimately worthless and a guy with 14 kids who gets hit with ALTMIN every year.