Tuesday February 9, 2010 10:38 PM ET
SmartMoney
Published March 20, 2009  |  A A A
SmartMoney Magazine by Jason Kephart (Author Archive)

10 Things the IRS Won't Tell You

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4. “The AMT is our ATM.”

When the alternative minimum tax was introduced in 1969, it affected only a handful of taxpayers with high income and big deductions. But by 2010, it will hit 87 percent of married couples with income between $75,000 and $100,000. That’s not what it was designed to do; the AMT was meant to force big earners with lots of deductions to pay their fair share. Now it “brings in a group of taxpayers the IRS has no problem with,” says Olson. “The AMT has run its course.” The problem is, the AMT hasn’t been updated to account for inflation. Instead, Congress has been adjusting exemption criteria on a yearly basis. “It’s just a Band-Aid,” says Hockenberry.

The Band-Aid in this year’s stimulus plan reduces the number of taxpayers subject to the AMT to 4.4 million—it would’ve been 30 million, according to the Tax Policy Center. But if you’re living in a high-tax state or married with two or more kids, you might find as you calculate both your regular return along with the AMT—form 6251, which taxpayers are responsible for—that you could be liable for the latter. Confused? The IRS offers AMT assistance at www.irs.gov; click on “Online Services.”

1,001 Things They Won't Tell You

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User Comments
Posted by: Taxpayer_Owner
Sure Ms. Olson has talked about the IRS's shortcomings, ruffled a few feathers, and wrote some tough reports. Unfortunately, Ms. Olson has not been able to get very much accomplished in her seven years on the job other then create a high employee turnover rate. She tried to simplify the tax code by creating a standard definition of a child. When all was said and done, she only made matters worse. So much worse, the law had to be amended.

Ms. Olson also destroyed the very program in the IRS that was set up to assist taxpayers. Before Ms. Olson, if you needed help with a tax problem that was not dealt with satisfactorily through normal channels the IRS would transfer your case over to a group that had the experience in your particular issue and the authority to fix your problem on the spot. Ms. Olson has forsaken this logic. Now if you need help and your case is transferred over to her program it will most likely be assigned to someone that is not experienced or even prop...(Read more of this comment)
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Comments From Around the Web
Posted by: LeLe on Blueprint for Financial Prosperity

I just have a question… hopefully someone knows. I received one of these and marked the option 3 on the letter and sent back. Since I sent it in I have not recieved any additional letters or contact at all. So I have proof that they had mistaken the years… But I am not sure if no response is a good response or if I should get some form of notification. So now when i file my current taxes… i am worried that if there was something wrong then, i would not recieve the money they owed to me for 2009. Im concerned.. if anyone could help i would appreciate it.

Posted by: Anonymous on Blueprint for Financial Prosperity

Fallout kicks ass

Posted by: ebolooaaa on Blueprint for Financial Prosperity

Got one of these letters today, Dec. 2009. Claiming some adjustment to my 2007 returns. I was able to call the number listed and talk with one of the IRS people and after informing him that it was the IRS that missed my deduction…..he agreed (NOW I’m frighten). He stated that a letter or cancellation/form would be forward to be in 4 weeks……but this is where they get you…The letter that I got from them states that I must respond to this letter using the form send to me, by them by Jan. 2010, way less then the 4 week cancellation form I’m suppose to get from them..so I think, telephone conversation or not, I’m going to send their form back marked Option # 3 I DO NOT AGREE WITH ANY OF THE CHANGES, I enclosed documentation to support the entries on my original returns.

Posted by: ExpressTaxRefun on Twitter

10 Things the IRS Won't Tell You: http://bit.ly/5DyXaq

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