Understanding the Alternative Minimum Tax

What three letters spell bad news for your tax situation? AMT. The Alternative Minimum Tax was created back in 1969 as a means for making sure that even the wealthiest individuals paid their fair share in taxes. Fairness is good, but there's a problem with the AMT. Over the years it has started to snag even more people, even those who aren't terribly wealthy.

As it stands now, even with a modest income you could find yourself in a situation where you owe the AMT. Trust me, qualifying for this tax isn't something to be proud of! Wondering if you might get hit with the AMT? Here's some information to help you calculate the AMT for your own situation. Think of it this way -- if you catch it now you have ten months to prepare for it. That's a far better alternative than getting hit with a surprise next April.