According to our tax guy, 2012 may be the first year that I'll be subject to the AMT. I researched it a little more and it looks like the exemptions for calculating the AMT are going to free fall from $74,450 for married people filing jointly in 2011 to $45,000 for married people filing jointly.

Is anyone else worried that Congress isn't going to patch the 2012 AMT? I've never really thought about it in the past.

Background: We're married filing jointly. My husband and I both have full-time jobs that are W-2'd and I also have a part-time job that changed from W-2 to 1099 in the middle of 2011. Instead of paying quarterly for the 1099 job, I changed my withholding to Single-Zero and my husband's is Married-Zero, plus I have an extra $150/month withheld.

I've also increased my 401K withholding from 10% to 15% to lower my adjusted gross.

We owed a little to the feds last year and we owed a bit more to the State of California. Now we're making quarterly payments to the state because they gave us payment slips when we filed. Hopefully, making all these changes, we'll only owe a couple hundred to the feds next year, but I'm still worried that we're doing something wrong.

Is there anything else I should be doing to make sure I don't owe a bunch at the end of the year?

Patching the AMT is a big battle cry for some people but it should only effect you in certain situations and if you earn a lot of money and have a lot of deductions. I think the biggest fear is that many more people will have to fill out the forms. I suspect that we will have to file AMT this year if there is no patch but I'm not actually that worried about it. The top marginal rate for the AMT is 28% so if you are already in a higher marginal bracket then it should not impact you much at all. If you are near the top of the 25% marginal bracket then that's when you are most likely to have to pay a little extra, especially if you pay high state taxes, mortgage interest, and so forth. Given that you live in California perhaps that's the case.



We really have a pathetic group in Congress right now. They seem to like this game of waiting until the end of the year and then "fixing" things right before Christmas. That is such a horrible thing to do to the country because it means no one knows what the rules are going to be until it is too late to do anything about it.

Things like a business tax credit for buying new equipment might be great for the economy. But if enacted on December 23, it completely loses any impact it could have because it is simply too late for any business to act on it.

So, short of setting aside extra money just in case you have to pay, there is not a whole lot you can do because NO ONE knows what is going to happen.

If I had to guess I would say that I think some things will get passed in September while there is still time for Congresslosers to tell their constituents what a wonderful job they've done before the election. But I would not wager so much as $1 on that because it could easily happen next week just so it's done and doesn't haunt anyone come election time, or late in December again, especially if there is a big change in control either way.

You're right, we're at the top of the 25% marginal bracket and we deduct state income tax and property tax now that we can itemize. 2011 was the first year we'd ever itemized because we bought our first house.

It's not that I'm against paying taxes; I want to do my part. I just don't like the idea of being surprised when we meet with the CPA next year.

Also, it doesn't seem that anyone else is worried about the falling AMT exemption. I've talked to co-workers and friends about it and none of them are aware that it might affect them. Some don't actually believe me.

The whole situation is a somewhat "chicken-little-ish." Based on my going through the tax form without actually filling it out, it seems like what it means is that if you have disallowed deductions over the exemption then you could pay slightly more tax on it. So if your deductions are around $45000 or more then you could pay more.

4% interest on a $500000 house = $20000
Property tax on the same house $5000
State tax at 9% on $200000 = $18000

You're at $43000 except that the mortgage interest on the house only counts if it's a second home. So, it's a little hard to get to the limit anyway.

Don't get me wrong, I'm not in favor of the AMT and I have not thoroughly analyzed the effect it could have on me. But I have read about it generally and, except for maybe having to fill out an extra form, it doesn't seem like such a big deal.

I think the AMT can really hit some groups e.g. high tech workers who have received incentive stock options. I have never fallen prey to the AMT but then, I have never itemized my taxes. If you use tax software then it should automatically fill out the form for you. You might have to upgrade to "Deluxe" or something, costing you an extra 20 bucks or so.