Alternative Minimum Tax (AMT)

Can I escape the AMT?

You might be able to avoid owing the dreaded alternative minimum tax (AMT) – depending on your income, your capital gains, and a handful of other factors. But if you have a gross income of $75,000 or more and a significant capital gain or stock options, or a home equity loan interest, there's a pretty good chance you'll be one of the several million Americans who must pay the AMT, a kind of parallel universe of federal taxes that requires extra, complicated calculations.

The AMT was originally created in 1969 to ensure that wealthy taxpayers wouldn't game the system to get out of paying their fair share of taxes. The income levels that trigger the AMT were not indexed for inflation, however. As a result, increasing numbers of middle-income Americans have found themselves owing this tax.

Each year Congress debates how to fix the AMT to avoid this bracket creep, typically enacting a one-year fix (if it does anything at all). The legislators came up with a patch in 2008 for '08 taxes and then again in the 2009 Stimulus law, for '09 returns.

The following links will help you to understand the AMT, determine whether you're likely to get socked by it, and figure out what to do if you must pay this tax.