Obama and Biden release tax returns – Vice President still stuck in the Alternative Minimum Tax
By: kinal | Posted: 18th June 2009
Shortly after April 15 President Barack Obama and Vice President Joe Biden released their 2008 income tax returns. What these tax returns showed is that the President is not paying the Alternative Minimum Tax, but that the Vice President is still stuck in it, as he has been for several years. We had seen this when they made their prior year tax returns public during the presidential campaign last fall.
Vice President Biden's income puts him and his wife in the "wealthy" category, as defined by the President - those individuals with incomes over $250,000. But with total income of $269K, just barely over that threshold, it may seem odd that he would be subject to the AMT. Unfortunately, our VP's situation once again confirms that the Alternative Minimum Tax in its current form is not in any way related to the original AMT enacted 40 years ago. As it has for quite a while, it continues to hit "ordinary" Americans working hard for a living who just happen to be caught in its "sweet spot." And that sweet spot continues to grow - currently over 4 million taxpayers and counting.
Why Biden in the AMT but Obama is not? As we'll see in future articles, he is making just enough income, and has just the wrong level of itemized deductions, and it is the interplay of these two that does it. The President, on the other hand, with the substantial book royalties he is earning, had nearly $3 million of income, at which level the "regular" tax is higher than the Alternative Minimum Tax.
Is there anything the Vice President can do about this? Of course there is - nearly everyone can reduce his/her/their AMT liability. In VP Biden's case, his focus should be on timing his tax deductions in a more AMT-efficient manner. Especially with the higher tax rates looming on the horizon - remember that rich people like him will soon be paying the promised higher taxes - the Vice President easily could save on his taxes by doing some simple planning. All this would take is a little modeling with a tax software program to see how tweaking his deductions and moving them between this year and next year could have a direct impact on his Alternative Minimum Tax.
The tax returns for both the President and the Vice President were disclosed on the White House web site - www.whitehouse.gov.
George Bauernfeind is with AMT Individual - providing information on Alternative Minimum Tax Planning . He writes articles to help the tax payers to pay less Alternative Minimum Tax. He recommend to use Alternative Minimum Tax Calculator to reduce Alternative Minimum Tax.
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Tags: horizon, incomes, vice president, vp, tax deductions, interplay, sweet spot, income tax, threshold, taxpayers, tax rates, alternative minimum tax, barack obama