It might sound like a tax invented for Coachella, but it's really a tax created to make sure that the rich pay their fair share. It has nothing to do with "alternative" or "minimum" anything, really. Created by Congress and the IRS, AMT adds stuff back to the "adjusted gross income" line of your IRS tax return. If you’re really rich, you might find that you can't claim the same deductibles you did before—and you'll end up paying more taxes.
AMT ignores one basic thing: the rich don’t fill out the "adjusted gross income" line of their tax forms. They have people who do that for them... people who incidentally know tax laws really well and can find loopholes anyway. Thanks to the fact that AMT is complex and not really doing much, there was much grumbling about it (as there is with any tax).
In response, President Obama signed a law in 2013 that was supposed to be a patch to fix some of the problems. People kept grumbling anyway and voted for Trump.
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Finance: What is the Alternative Minimum...2 Views
Finance a la shmoop. What is the alternative minimum tax or AMT? People
it's evil pure evil originally the alternative minimum tax affectionately [Guy wearing devil horns with flames in the background]
called alt min existed so that truly wealthy taxpayers had to at a minimum [Guy opens a letter from the IRS]
pay something think about the concept when you envision a Warren Buffett with
over sixty billion dollars in net worth paying a hundred grand a year in taxes
yeah that's what he does well the problem the altman tax system wasn't
indexed to inflation so lots of middle-class folks today now indexed to [Lots of people walking]
inflation are caught in the alt min trap this is the tax system that ended up
punishing the super duper wealthy you know people like in orthodontists
married to a substitute school teacher that's who alt min punishes yeah the tax [Tooth and drawing of a teacher appear]
man cometh for you well Congress gave birth to this tax in
nineteen sixty nine because well at the time a hundred fifty five tax payers had [Guy holding the alt min tax bill]
the temerity to pay no tax today about 5 million people pay alt min taxes which
has really become a parallel tax or incremental tax to the normal tax people
already pay the taxpayer figures out his tax completely ignoring alt min at first [Woman looking through papers]
then she figures out what she owes under alt min and if she owes more under alt
min well then she pays alt min if she owes more without alt min well then she [The tax bills are shown]
just ignores it in other words the IRS always wins the schmucks caught in alt
min lose all sorts of deductions state and local taxes business expenses and
childcare and it's pretty much the middle class of America today who bears
the most pain in this alt min situation people in high tax states bear much of [High tax states are highlighted]
the burden but well good for the IRS they were really hurting [Desk full of piles of tax checks]
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