Understanding AMT

For the past few years my husband and I have been getting hit with AMT because we have large deductions (taxes and charitable contributions) but a small amount of mortgage interest (old mtg). We recently purchased a new home and thought we might avoid the AMT. Other than actually doing the entire AMT calculation & 1040 (I still don't have all of the records to compute for 2004 yet) is there a way to estimate whether the AMT will apply? Since there was a rule change in the way taxes need to be paid/withheld, I recently discovered that we need to pay 110% of our 2003 tax liability (or 100% of 2004 taxes, if lower) or face a penalty by Jan 18. I'd like to think that I might owe less than what was withheld, but am not sure. Any good way to estimate 2004 tax liability without significantly overpaying the government? Any good resources out there to thoroughly understand AMT?

Jenento,

I agree the AMT is a nightmare, and there is no good way to know if AMT applies to you until you do your regular taxes.
The main reason for this is both systems use the same base numbers.

H&R Block has a tax estimator on line, I do not know if it considers AMT.
Here is the link: www.hrblock.com

The AMT law is set to ancient numbers. The married exemption amount is a paltry $45000. And when it's $45,000 it snags 25 million people.

EACH AND EVERY YEAR, congress goes back and patches it one more time, bumping it from $45000 to $66250 and then the 25 million drops to a more manageable 2.5 million. (The exemption amounts are *not* indexed for inflation, so they always default to the ancient $45000 amount.)

This, by the way, a political decision. By letting it default back to $45000, the estimates on tax revenues are inflated and can be used to justify outrageous spending. Then, they "patch" it in December in time to not have it actually affect so many people....

FYI - interestingly enough, the AMT patch has been included as a last-second add on with the TARP legislation of the Emergency Economic Stabilization Act of 2008. The numbers for 2008 are $69,950 (MFJ) and $46,200 for singles.