This is an old-fashioned "good-un" from Tennessee.
Not really old-fashioned because it addresses an increasing problem,
namely the AMT.
In states like Tennessee, Texas, etc. with no state income tax, it
is not unusual for high-income taxpayers to take the standard deduction.
Because of not paying state income tax, conservative spending habits,
paid-off mortgages, etc. I have, for example, one taxpayer whose
AGI is almost $320,000 and is taking the $10,300 standard deduction
for married couples.
If he were to itemize deductions, the largest item on his return would be
property taxes on his huge house, some $5000, followed by sales taxes
apprx $3600. That's it. Contributions of some $200. No interest.
Nothing else.
Some of you in other parts of the country may marvel that this guy's house
only bears taxes of $5000, when the burgiouse in places like New Jersey
pay more than that in middle-class neighborhoods. But trust me, if you
have property taxes of $5000 in Tennessee, you own a mansion or a
Ponderosa, one or t'other.
Question: Is there an obligation to report these taxes for AMT purposes
even though they cannot itemize? The instructions say the standard
deduction is automatically figured into their razzle-dazzle calculations,
and for all I know, they could be right. If these taxes are entered onto
form 6251, will it be a "wash" and thus harmless?
Worse still, is the preparer under obligation to report these taxes, even
though the taxpayer cannot benefit on a schedule A??
Not really old-fashioned because it addresses an increasing problem,
namely the AMT.
In states like Tennessee, Texas, etc. with no state income tax, it
is not unusual for high-income taxpayers to take the standard deduction.
Because of not paying state income tax, conservative spending habits,
paid-off mortgages, etc. I have, for example, one taxpayer whose
AGI is almost $320,000 and is taking the $10,300 standard deduction
for married couples.
If he were to itemize deductions, the largest item on his return would be
property taxes on his huge house, some $5000, followed by sales taxes
apprx $3600. That's it. Contributions of some $200. No interest.
Nothing else.
Some of you in other parts of the country may marvel that this guy's house
only bears taxes of $5000, when the burgiouse in places like New Jersey
pay more than that in middle-class neighborhoods. But trust me, if you
have property taxes of $5000 in Tennessee, you own a mansion or a
Ponderosa, one or t'other.
Question: Is there an obligation to report these taxes for AMT purposes
even though they cannot itemize? The instructions say the standard
deduction is automatically figured into their razzle-dazzle calculations,
and for all I know, they could be right. If these taxes are entered onto
form 6251, will it be a "wash" and thus harmless?
Worse still, is the preparer under obligation to report these taxes, even
though the taxpayer cannot benefit on a schedule A??
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