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Surprise tax could hit millions unaware

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HOUSTON (FOX 26) -

Amid the continuing debate over the "Fiscal Cliff", a little-known tax is threatening to take a chunk out of millions of household budgets for the first time.

The Alternative Minimum Tax was created in 1969 to target millionaires who avoided paying taxes through exemptions and deductions.

Over the decades, the AMT has been adjusted for inflation to keep from catching more middle-class taxpayers.

If Congress doesn't agree to a new adjustment by the end of the year, about 28 million taxpayers could be caught by the financial threshold that requires they pay AMT.

"You're not doing anything different," says financial advisor Lance Roberts.  "You're not claiming anything different, but because of the itemized deductions that you're taking and because that limit has come down below your income: You're now subject, potentially, to AMT."

The bipartisan Tax Policy Center estimates some household incomes as low as $45,000 could be hit by the AMT, with the average bill climbing $3,500.

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