Employees get the short end of the stick when it comes to business expenses. Why? The alternative minimum tax (AMT) does not allow a tax deduction for employee business expenses.
The AMT is one result of the big 1986 tax reform, in which lawmakers put one over on the American people. The big selling point in 1986 was that the top tax rate would be only 28% and that, in effect, the new law would produce a type of flat tax with only two brackets, 28% and 15%. The word on Capitol Hill at the time was that you could get the American public to buy “any type of tax” if the top rate was less than 30%.
The AMT is one perfectly unfair “any type of tax.” It has one simple purpose: to tax what the regular tax allows as deductions. Is this stupid or what? After all, if lawmakers do not want taxpayers to deduct certain expenses, why allow those expenses in the first place?
The employee business expense AMT debacle affects all employees who pay their own expenses, including many
insurance sales professionals,
real estate sales professionals,
traveling sales professionals,
emergency room physicians,
mortgage brokers and bankers, and
When the AMT nails these employees, they pay thousands more ... Log in to view full article.