Beruflich Dokumente
Kultur Dokumente
The alternative minimum tax, commonly referred to as the AMT, has its own set of rates
(26% and 28%) and requires a separate computation that could substantially boost your tax
bill. Basically, it's the difference between your regular tax bill, figured using ordinary income
tax rates, and your AMT bill, figured by filling out more IRS paperwork. When there's a
difference, you must pay that amount, the AMT, in addition to your regular tax.
Unfortunately, certain tax breaks are disallowed under the AMT, including exemptions for
eligible dependents as well as certain popular deductions.
The AMT was designed in 1969 to ensure that wealthy taxpayers didn't use loopholes to
escape paying their fair share of taxes. The original target was 155 filers with the thenexorbitant income of $200,000 who avoided paying any federal taxes.
You could owe AMT for these tax years if taxable income was more than:
Filing status
$53,600
$53,900
$41,700
$41,900
$83,400
$83,400
That oversight was corrected in 2013, with the enactment of the American Taxpayer Relief
Act. Now the AMT is adjusted each year to reflect inflation.
Even with the inflation adjustment, some taxpayers still must calculate the AMT. More
frustrating is that the AMT's parallel system demands that taxpayers do more work to pay
more in taxes. The effort is required in filing paperwork (the dense, 2-page Form 6251,
Alternative Minimum Tax -- Individuals) and maintenance of separate records for regular
and alternative tax purposes.
And filers who escape actual payment of the higher tax still must do additional work just to
learn that they don't owe the AMT.
To help sort through the AMT mess, some taxpayers turn to computer software packages,
most of which include AMT computation, or hire professional help. Both choices should help
you stay on the IRS' good side, especially if you owe AMT, or at least put your mind at ease
if you don't.
But the options also will add to the overall cost of calculating your tax bill.
You don't have to enter your name, Social Security number or other identifying data. The
program, which guides you through a series of QandA pages, only wants the numerical data
from your forms.
When you're finished, it will tell you whether you now have to fill out the AMT form, but it
won't tell you the actual tax damage. You'll still have to fill out Form 6251 to find out that
amount.
issue for taxpayers younger than 65; they already must meet the 10% deduction limit on
their Schedule A.
Miscellaneous itemized deductions, although limited under the regular tax system, are
disallowed under the AMT. Even large families can be hit. If your personal exemption total is
big, look out.
Own a home? Some cherished home-related tax breaks take an AMT hit. While mortgage
interest on your main and 2nd home is still AMT-deductible, home equity loan interest is
restricted. It can't be deducted unless the money is used solely to pay for home
improvements. Your home's property taxes also are disallowed as deductions under the
AMT.
In addition, some tax credits that reduce your regular tax liability do not reduce what you
owe under the AMT. Once you add back these disallowed credits and run the numbers, you
might be subject to a bigger IRS bill if your taxable income exceeds the annual AMT
exemption amount for your filing status.
If you find you must pay the AMT, the extra money you owe, along with the added
paperwork hassle, is never welcome. But dealing with it now is better than the alternative:
letting the IRS discover that you should have paid it. When Uncle Sam comes asking for
back taxes, he wants interest and