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I have read and read about this and please tell me if i am correct.
I understand this: I make X amount of dollars. I pay X amount of taxes in each check. At the end of the year on my W2 it tells me the total of my Income and Fed Tax paid. Now, when I go to file my taxes I take deductions for Mortgage interest ( 2 homes ) and charitable contributions, job related expenses and IRA contributions.
Now that gets me my Taxable Income, which I then use to determine the Tax I should have paid. I take that number and deduct from the Taxes I actually paid for 2007 and determine if I owe or due a refund.
but,
The amt kicks in and says "hold up...becasue you made X amount of income in 2007 and had all these deductions...we have changed the rules and re-calculated your Taxable Income" Now you OWE $3482 have a nice day...
So why have deductions? Why buy/own other things ( investment property, investments etc ) if I am only going to be penalized in the end? If I had standard deductions I would be spot on with my taxes, but because of the AMT, I will have to pay extra to the Feds?
is this correct?
I understand this: I make X amount of dollars. I pay X amount of taxes in each check. At the end of the year on my W2 it tells me the total of my Income and Fed Tax paid. Now, when I go to file my taxes I take deductions for Mortgage interest ( 2 homes ) and charitable contributions, job related expenses and IRA contributions.
Now that gets me my Taxable Income, which I then use to determine the Tax I should have paid. I take that number and deduct from the Taxes I actually paid for 2007 and determine if I owe or due a refund.
but,
The amt kicks in and says "hold up...becasue you made X amount of income in 2007 and had all these deductions...we have changed the rules and re-calculated your Taxable Income" Now you OWE $3482 have a nice day...
So why have deductions? Why buy/own other things ( investment property, investments etc ) if I am only going to be penalized in the end? If I had standard deductions I would be spot on with my taxes, but because of the AMT, I will have to pay extra to the Feds?
is this correct?