April 11, 2008 Paying taxes under the AMT Play video

(NECN/ABC) - As maddening as it may be to do your taxes, consider that some earners have to do theirs twice. As you're doing your taxes this year, beware. There's not just one income tax system, but two, and if you make enough money, you'll have to figure your taxes twice.

Congress created the alternative minimum tax 39 years ago after learning that 155 taxpayers who made more than $200,000 paid no federal income taxes.

The AMT, as it is called, eliminates deductions most Americans have come to expect: deductions for children, housing and state and local taxes.

The AMT kicks in after a certain level of exemptions are reached, so people can't avoid no taxes at all.

The problem is that the amount of exemptions has never been adjusted for inflation, so as incomes have risen, so have the number of middle class families hit by the AMT.

Government estimates say about four million people will pay taxes under the AMT.

ABC's Betsy Stark has more in this Money Minute.