The higher AMT limit won’t help you?
@Jane, how did your tax go up? Mine went down because I won’t be in AMT any more. I can finally take 10K deduction for SALT. Were you not in AMT last year?
Didn’t pay too much AMT last year for a number of reasons. So I am negatively impacted by the new tax laws.
Once you are in AMT, you could not have deducted SALT. That means you will benefit from the new tax laws for your home. Other things might have changed in your life (hopefully for good) that might be increasing your tax?
What % of households in Bay Area pay AMT?
Last year the limit was around $170K earnings. Seems like a significant percentage of households in the peninsula will be above that. For the other folks who happen to live there because they bought their homes earlier, property taxes won’t be high anyway. That’s why I feel it’s a non issue for most folks. I may be wrong.
It’s less than you think. Palo Alto median household income is $137k. I don’t think people realize how many people bought decades ago and could never afford their home at current prices.
Sure, then their property taxes won’t be $10K per year, right? Some of my elderly neighbors pay $2K per year.
AMT effectively phases out after certain threshold (which is different per individual) because higher tax bracket starts to play out.
Tax laws are set up to benefit rent-seekers like you (holding on to all the AAPL stock dividends and austin rents) and the poor. People who get income primarily from W2 are impacted in an outsized manner
You can see who is affected or benefited by tax
Hmm, married couples with no kids in a high tax state only pay more if they are $25k-75k income or over $750k. The over $750k is only $630 more. Once you add 1 kid, then only those making over $750k/yr pay more. It’s single no kids who get screwed the most. Their taxes go up for anyone making over $200k/yr.
Not sure which model you are using (quite a few out there). All of them seem to miss a case which I think is pretty common for the bay area (and reflective of me) - high state tax from W2 income and high property tax (having bought primary in a fortress city in 2014)
My taxes are up quite a bit. I did it by hand for my specific case
The NYT link above.
2014 is still good. imagine 50% appreciation on top of that with all that tax!
Yep. If you bought a bay area house in the last 4-5 years you are screwed
Sorry to keep repeating the same thing but I am confused about how being under AMT you were able to deduct your state and property taxes last year. If you did n’t then the issue this year is something else.
It depends on deduction amount and AMT amount.
If deduction is like $60000 (high deduction) and AMT is $2000 (small amount), still single/joint filing can deduct SALT.
AMT effectively phases out after $600K or so.
Besides, tax=max(ATM_wise_tax, regular_tax).
Although your AMT_wise_tax>regular_tax last year, if your regular_tax goes up so much due to lack of SALT deduction, then regular_tax becomes larger than AMT_wise_tax. Then, you should pay more tax.