10 Things the IRS Won't Tell You

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.”