Tax increase for the middle class - paying for tax breaks on the

[BR_Parkway]

backs of the working people.

Page 11 of the IRS 1040 guidelines this year show 2 very little talked about items
http://www.irs.gov/pub/irs-pdf/i1040gi.pdf

New for 2006

Personal exemption and itemized
deduction phaseouts reduced. The
phaseouts of the personal exemptions and
itemized deductions will be reduced by 1⁄3.

emphasis added

Certain credits no longer allowed against
alternative minimum tax (AMT). The
credit for child and dependent care ex-
penses, credit for the elderly or dis-
abled, education credits, mortgage interest
credit, and carryforwards of the District of
Columbia first-time homebuyer credit are
no longer allowed against AMT and a new
tax liability limit applies. For most people,
this limit is your regular tax minus any
tentative minimum tax.

AMT exemption amount decreased. The AMT
exemption amount will decrease to
$33,750 ($45,000 if married filing jointly
or a qualified widow(er); $22,500 if married
filing separately)

Now, I'm not an accountant (nor do I play on on TV) but they've lowered the amount you can earn that would be exempt from AMT, taken away credits you could have applied to it for child/elderly care, education, mortgage interest or first time homebuyer money. And while they were at it - plan on reducing the other personal deductions by 1/3?

Please tell me the name of my personal Millionaire that I'm supporting here - I want to make sure he spells my name properly in his will when he shows his undying gratitude (assuming we kill off that evil death tax :sarcasm: ) Anyone know a blue company selling pitchforks?

[converted_democrat]

1. There are going to be a bunch of unhappy people..

The next person that tells me they voted for * because of lower taxes is going to hear all about this..

edited- because I don't know what year this will effect

[BR_Parkway]

3. If this is new for 2006, won't it apply next year, after the elections?

[converted_democrat]

5. That is a very good question that I don't have the answer to..

I had this conversation about AMT about a month back on here, and I assumed that it would apply to this year. The person that was telling me about it thought so too, because he kept saying how much it would piss off Bush voters.. But I do not know if it applies this year or the coming year.. Our accountant handles everything for us, so I have no clue.

[WCGreen]

2. Here is what happens with the AMT....

The percentage of the tax doesn't change... So those already being hit by the tax will ony feel a small increase i tax...

While the people in the lower brackets who may prepare their own taxes, will neglect to consider the AMT and file a return that does not include the AMT calculation or form... When the IRS runs it through the checking process, they will catch the mistake and charge you penalties and interest for neglecting to pay the increase in tax...

[CAcyclist]

4. Actually this says the Phaseouts will be reduced by 1/3

So does that mean that the deductions will be entirely eliminated over time? This sentence above I take to mean the reduction for 2006 will be less severe than otherwise planned.

But this is the first time I ever heard of our personal exemption /deductions already definitely being reduced or eliminated!

[American liberal]

17. I've really had it. It's bad enough I have to work two jobs just

to make ends meet. Now, these bastards are reducing my exemptions while they continue to institute corporate welfare and huge tax breaks for the rich?! What I REALLY don't get is how the people who voted for these MFers can continue to support them and their crazy, self-destructive policies!!!!!!!!!!!

I am so through.

[Cleita]

6. You're surprised?

They have to recoup the tax money somehow and this is how they do it with a burden on the working middle class.

[Clark2008]

7. Jesus Christ on a trailer hitch.

These fuckwads believe someone earning only $22,500 with a child can make it without the exemptions they get now?

:crazy:

[Egalitariat]

14. The person you described wouldn't be subject to AMT****

nm

[Neverarepublican]

8. Does anyone understand what the phaseouts of the itemized deductions mean?

It states:

Personal exemption and itemized deduction phaseouts reduced. The phaseouts
of the personal exemptions and itemized deductions will be reduced by 1/3.

Can someone explain this?

[oscar111]

9. sounds like they are slowing down the end of the PE and ID.

that is what it says. I have not heard of such an end of them both... that is big news, right, if true?

[Egalitariat]

15. If you make enough money, you get to deduct less and less

of your income. For instance, people who make a lot of money only get to deduct 20% of their charitable contributions (and other qualified deductions) from their "taxable income". The other 80% has been "phased out".

You or I could deduct 100% of our charitable contributions (ignoring the standard deduction).

My assumptions is that next year, people who make a lot of money will get to deduct closer to 45% because the phase-out has been reduced.

[melody]

10. Yeah, no new taxes

Just fewer exemptions.

[unblock]

13. it's worse than that

the reduced phaseout is a tax CUT for those earning enough to be affected.

so ordinary people lose ordinary deductions, but richer people get to keep more of theirs.

[melody]

16. These are cuts made by the guys who used to beat us up for lunch money

They're bullies. Bush has been milking his chance birth for all he could his whole life.

Everything he does is automatically going to tilt things in his favor.

[recoveringrepublican]

11. ok, stupid question, but what was the AMT to begin with?

My husband and I don't itemized and the only thing we really could deduct is our mortgage interest, but it's small and we get a bigger deduction with standard. I have no clue what AMT is or how this effects me.

[unblock]

12. amt is the minimum tax

it was designed to prevent the ultra rich from not paying any taxes at all due to deducting everything under the sun.
basically, there's a big exclusion but only very limited deductions and the rest is taxed at 26% or 28%.

you're supposed to calculate your taxes the normal way, then the minimum tax way, and pay whichever is greater.

they never adjusted the limits and exclusions for inflation, so each year more and more ordinary people creep into amt-land.

chances are really good that if you don't itemize, you don't owe minimum tax. there are other cases that may apply, e.g., if you exercised employee incentive stock options and your company went ipo.

[applegrove]

18. They want to SMASH the middle class in half. Then the top half

will be elite assholes.

[1932]

19. Mortgage interst is now captured back by AMT????!!!!???!!! That's going to

KILL a lot of middle class taxpayers.

[converted_democrat]

21. Do you know if these changes will apply this year, or the next? n/t

[1932]

22. OP says these rules are new for this year

[lovuian]

20. Republicans wanted to get rid of the Mortgage deductions

heres a way of doing it...

[Kurovski]

23. Kick(nt)