The AMT was designed in 1969 to ensure that wealthy taxpayers didn't use loopholes to escape paying their fair share of taxes. The original target was 155 filers with the then-exorbitant income of $200,000 who avoided paying any federal taxes.
When an AMT payment is required, affected taxpayers could end up paying thousands more in taxes. That possibility has been a major threat since the alternative tax's creation because it was not indexed for inflation. Without that annual adjustment, a yearly raise of a few percentage points meant a taxpayer was closer to or even into the income realm that the tax law deemed almost 40 years ago as prime AMT bait.
You could owe AMT if your taxable income in 2012 was more than:
- $78,750 for a married couple filing a joint return and surviving spouses.
- $50,600 for singles and heads of household.
- $39,375 for a married person filing separately.
For the last couple of years, the IRS has provided AMT Assistant, an online tool which offers assistance in determining if you owe the tax [based on answers to] questions about entries on your draft 1040. Read more
Unfortunately Congress has continued to kick the can down the road and failed to address the indexing issue. Here is a link to the 2011 AMT Assistant tool
. Ideally the 2012 version will be available soon.