Alternative Minimum Tax

It’s the deadline for filing your taxes tomorrow. Some Americans have had a surprise hike in their tax bills because of something called the alternative minimum tax. This tax began in 1969 as a way to keep the richest Americans from sheltering their income. Because of wage increases and inflation, this tax now hits the middle class. The alternative minimum tax works alongside the income tax. People who earn a certain amount and meet certain deduction thresholds must calculate their taxes two ways—the regular way and the alternative minimum way. They have to pay whichever tax bill is larger. The alternative minimum tax runs 26% on the first $175,000 and 28% on anything over that. Del Goehner, CPA and founder of Goehner Accountancy, an accountancy firm located in Pasadena, joins Larry to discuss the issue.