Demo: Alternative Minimum Tax


SAMPLE

Before mailing your tax return, check to make sure you aren't subject to the alternative minimum tax (AMT). In recent years, more and more people have found themselves subject to the AMT, according to the IRS.

The tax law gives preferential treatment to some kinds of income and allows special deductions and credits for some kinds of expenses. Taxpayers who benefit from these provisions of the law may have to pay an additional tax called the alternative minimum tax. It is a separate tax computation that, in effect, eliminates many deductions and credits and creates a tax liability for an individual who would otherwise pay little or no tax.

You may have to pay AMT if your taxable income for regular tax purposes, combined with certain adjustment and tax preference items, is more than:

  • $45,000 if you are married filing a joint return,
  • $33,750 if you are single or head of household, or
  • $22,500 if you are married filing a separate return.

The more common adjustments and tax preference items include: personal exemptions, standard or certain itemized deductions, state and local tax refunds, accelerated depreciation of certain property, the difference between gain and loss on the sale of property, incentive stock options, depletion allowances, intangible drilling costs, and certain tax-exempt interest.

If you meet the criteria noted above and have several of the listed tax preference items, you should determine whether you might be liable for AMT. For details, see the instructions for Form 1040, line 41, and Form 6251, "Alternative Minimum Tax."

Form 6251 and its instructions may also be ordered from the IRS by calling 1-800-829-3676.


This daily Tax Tip has been provided by the IRS

You may like these other stories...

OECD calls for coordinated fight against corporate tax avoidanceDavid Jolly of the New York Times reported that dozens of countries with the most advanced economies have agreed on principles for concrete action to prevent...
Plan ahead before you buy some shares in a stock mutual fund near yearend, when the fund is about to pay a dividend. It might be better to wait until after the fund goes "ex-dividend," that is, wait until after the...
AgFeed agrees to pay $18 million to settle SEC accounting fraud caseMichael Rapoport of the Wall Street Journal reported on Monday that AgFeed Industries Inc. has agreed to pay $18 million to settle US Securities and...

Already a member? log in here.

Upcoming CPE Webinars

Sep 18
In this course, Amber Setter will shine the light on different types of leadership behavior- an integral part of everyone's career.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.