Money: Taxed by Surprise

The AMT is socking the middle class. How you can try to avoid the blow

Tucked inside the 2005 budget from the Bush Administration is a proposal that may prompt you to sigh with relief if you have feared being hit with the alternative minimum tax (AMT). It's a patch--not a full-strength remedy--for a complicated tax that was designed to prevent the wealthy from avoiding taxes but is increasingly hitting the wallets of middle-class taxpayers.

According to current law, taxpayers must calculate their taxes two ways--under the regular federal income-tax schedule and under the alternative-tax scheme--and pay the higher of the two. About 2.4 million taxpayers will be subject to the AMT this year, says...

Want the full story?

Subscribe Now


Learn more about the benefits of being a TIME subscriber

If you are already a subscriber sign up — registration is free!