Tax Tip: Alternative Minimum Tax

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.

View more tax tips!


This daily Tax Tip has been provided by the IRS

You may like these other stories...

Truckers and other owners of heavy highway vehicles take note: Your next federal highway use tax return is due on September 2.The September 2 due date, which was pushed back two days because the normal August 31 deadline...
The head of the IRS has a message for taxpayers and tax preparers who have endured long wait times while on the phone with the tax agency: Call your member of Congress.During his keynote speech at the 69th Annual Meeting of...
Regulators struggle with conflicts in credit ratings and auditsThe Public Company Accounting Oversight Board (PCAOB), which was created by the Sarbanes-Oxley Act in 2002, released its third annual report on audits of...

Already a member? log in here.

Upcoming CPE Webinars

Aug 26
This webcast will include discussions of recently issued, commonly-applicable Accounting Standards Updates for non-public, non-governmental entities.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.