--- In vpFREE@yahoogroups.com, "sulbimenfg311" <sulbimenfg311@...>
wrote:
I have run into an unfortunate alternative minimum tax situation due
to video poker and I was wondering if any one had any advice to
offer
on the topic..
In 2007, I had little income. I calculated my refund due to me to be
around $1000. This was before realizing that I had triggered the
dreaded alternative minimum tax. In 2007, I had an overall losing
year
gambling but I had $68,000 in W2-G's. Due to deducting my losses to
offset my wins, the AMT was triggered, leaving me with a tax bill of
over $9000. Do I have any recourse or am I stuck paying this large
tax
bill with no income to show for it?
Not necessarily. You will have to itemize intsead of using the
standard (short-form) deduction, and claim your gambling losses to the
extent of any wins. This doesn't necessarily increase your tax
liability, except that when you itemize, you may now not be able to
deduct those specific items that you can list on a 1040, at least not
to the extent that they equal what would have been your standard
deduction.
The AMT is a deathtrap set up for situations similar to yours, where
there is a lot of cash flow but minimal net gain. The presumption that
the IRS makes is that this cash flow came from purposeful income-
generating activity, even when that is manifestly not the case. The
burden of proof, in this wonderful country of ours, falls on the
accused, er, taxpayer.
I would of course recommend that you spend an hour or two with a tax
professional, but my experience, with some years where I had W2-G's
ten times the amount you had, is that the AMT can be gotten around,
one way or another.