The alternative minimum tax was set up to go after rich people paying too little in taxes
. The alternative minimum tax calculation computes income differently, disallowing many deductions.
Then it subtracts an exemption amount intended to keep lower income people from being affected by this tax. If the AMT is higher than the regular tax the taxpayer pays the higher amount.
Unfortunately the alternative minimum tax exemption amounts have been watered down by inflation. Now many middle class taxpayers are exposed to this tax. The temporary increase in the tax exemption rate has expired and has dropped to an unconscionable level in 2012.
As a result many middle class taxpayers will be caught in the net of this nasty tax. It remains to be seen if Congress will deal with this issue before year end.