At what point will I receive AMT?

September 13, 2006

Date:  Mon, 24 Apr 2006
From:  Yeutang

Dear Michael Gray,

I am married and have a 1.5 year old child. We will file a joint income tax return for 2006.

I am considering buying a hybrid car. (The dealer says we can get a $3,150 tax credit for a Prius.) The credit is only allowed for the excess of the regular tax after other credits over the tentative minimum tax.

Scenario 1 – Total wages $120,000, capital gains $60,000. Will we have an AMT?

Scenario 2 – Total wages $120,000, capital gains $300,000. Will we have an AMT?

What is the maximum income that we can have and still qualify for the $3,150 credit?

Your help is very appreciated!
Yuetang

Answer

Date:  Fri, 05 May 2006

Hello Yuetang,

You haven't given me enough details to compute the AMT. There are many factors involved, including your state income tax situation, whether you have property taxes for a residence, and whether your capital gains are long-term or short term.

I recommend you meet with a tax advisor and pay to have him or her work through your particular situation.

Another issue – we don't know what the AMT exemption will be for 2006. Congress has been arguing over this for the last seven months. If we're lucky, there might be a resolution in a couple of weeks.

Good luck!


Mike Gray

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