Yesterday I got my tax return back from my CPA, and had a bit of a nasty surprise when I realized that I owed a couple of hundred dollars, instead of being owed a few thousand.
It only took me a few minutes to figure out what had gone wrong. The AMT figure was significantly higher than the ordinary tax number. I had sold some stock in 2005, had paid lots of state and federal taxes on the gain in 2006, and now was being punished for having paid those same state taxes. It feels like I'm being taxed twice!
I do love living in California, and I'm already resigned to the real estate prices, but when faced with the reality of also paying thousands of dollars a year to the federal government for the privilege, well, I start to entertain vague notions of moving to Seattle.
I've known about AMT for many years (my dad being a retired CPA), and it's even affected my taxes a bit for the last two years, but this is the first year that it's impacted my tax burden significantly, and let me just reiterate that it sucks very much. It's much worse in practice than in theory.
I'll say right now, that if a presidential candidate that I'm otherwise undecided about (not anti-choice, not anti-gay, not anti-Taiwan, not crazy) pledges to fix this broken system, I'll vote for him/her in November.
Vancouver Richmond Nightmarket
6 years ago
2 comments:
I'm not a tax expert, but how does moving to seattle help with AMT?
I don't even get what alternative minimum tax is. ...I guess I can go google it.
As I understand it, every taxpayer has to calculate his/her taxes twice; once using the regular tax system, and once using AMT. Then, he/she pays whichever is greater.
Unfortunately, AMT does not allow deduction of state income taxes from the federal income tax calculation, which means that residents of states with high income taxes (California, New York, etc.) are disproportionately more likely to have to pay AMT.
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