That way the IRS can deduct more taxes from my paycheck throughout the year so i can get more money back at the end of the year. it’s kinda like a savings account you could say. Makes good sense to me. But with every new year comes a new set of tax laws. this year the “AMT” or alternative minimum tax was passed and this is going to affect many middle income families. Under the regular IRS rules, you start with your gross income and subtract deductions like state taxes you paid, and exemptions like child credits. Eventually, you arrive at your taxable income. Under AMT rules, you still start with your gross income, but many of the usual deductions and exemptions are disallowed. Suddenly, your taxable income is alot higher. Some key breaks are lost so here’s a list of them. state and local income taxes and property taxes, unreimbursed business expenses, child-tax credits, tax-preparation fees, legal fees, home-equity loan interest just to name a few. The original idea behind this tax was to prevent people with very high incomes from using special tax benefits to pay little or no tax. But for various reasons the AMT reaches more people each year, including some people who don’t have very high income. I have a professional tax consultant do my taxes every year because it has just become so complicated i can’t afford to make mistakes so i recommend this same advice to most people out there unless you can stay on top of the ever changing tax laws
http://www.afatherslifeonline.com/2008/01/new-year-brings-new-tax-laws.html
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