Recent Examples of alternative minimum tax from the Web
Among other changes, the Democrats would restore the estate tax exemption at $11 million for couples, rather than double that, as became law under the GOP bill, and revive the alternative minimum tax.
Exploration Expenses The law's repeal of the alternative minimum tax for businesses will eliminate the ability to amortize exploration costs, according to Bloomberg Intelligence.
The law's repeal of the alternative minimum tax for businesses will eliminate the ability to amortize exploration costs, according to Bloomberg Intelligence.
Exploration Expenses The law’s repeal of the alternative minimum tax for businesses will eliminate the ability to amortize exploration costs, according to Bloomberg Intelligence.
The legislation also eliminates some complications that companies have complained about for years, including the corporate version of the alternative minimum tax.
The bill also reduces the number of people who will have to calculate their taxes twice, by limiting the reach of the alternative minimum tax.
If the alternative minimum tax is eliminated, that will also help top-tier income households.
The alternative minimum tax, designed to make sure the wealthiest Americans don’t avoid paying taxes through deductions and other tax breaks, will affect far fewer people.
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First Known Use of alternative minimum tax
Financial Definition of ALTERNATIVE MINIMUM TAX
What It Is
How It Works
Taxpayers must calculate their AMT separately from their "regular" taxes calculated on IRS Form 1040. The AMT, which is calculated using IRS Form 6251, starts with the taxpayer's taxable income (income after personal exemptions and standard or itemized deductions) and adds back various adjustments to arrive at a net alternative taxable income. The AMT rules disallow many personal exemptions and many deductions. The resulting higher taxable income is then taxed at flat rate. The taxpayer compares the tax calculated under the AMT method to the tax calculated under the "regular" method and owes the higher of the two.
The exemption amounts for figuring AMT change each year, so it's important to refer to the IRS instructions or a tax professional.
Why It Matters
The goal of the AMT is to ensure that everyone pays at least some income tax. This is why the AMT calculations effectively eliminate several types of deductions and credits, creating a tax liability for a person who would otherwise pay little or no tax.
The AMT system is complicated and controversial. Its elimination of many deductions and credits particularly affect people with large amounts of itemized deductions, people with many children or dependents, people who exercise incentive stock options, and those who pay high state and local taxes or high personal property taxes. Also, because the AMT thresholds have not been frequently adjusted for inflation, more and more middle-income taxpayers are subject to AMT.
The AMT is a good example of why taxpayers should take the time to plan for taxes and consult a tax professional. In some cases, those liable for AMT may be able to lower their total tax bills by claiming itemized deductions on Form 1040, even if their total itemized deductions are less than the standard deduction. This is because the AMT system does not allow the standard deduction, and if a taxpayer claims the standard agency bond on Form 1040, he or she cannot claim itemized deductions for the AMT, according to the IRS. This could result in a lower tax bill even though the taxpayer has claimed fewer deductions.
[InvestingAnswers Feature: The AMT Trap and How to Avoid It]
alternative minimum tax
legal Definition of alternative minimum tax
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