AMT stands for Alternative Minimum Tax. AMT is an alternative tax calculation that re-figures taxable income without personal exemptions and certain itemized deductions.
Those certain itemized deductions that are not allowed for AMT purposes are:
- All state and local taxes (income tax, property tax, car registration, etc.)
- Miscellaneous deductions subject to the 2% of AGI limitation
- The allowable amount of medical expenses is different
- Mortgage interest if any part of the mortgage was used for a purpose other than buying, building or improving your home (example: you take out a line of credit on your house to buy a car — the interest on that LOC is deductible for regular tax purposes but not for AMT)
There are many other adjustments that may need made, depending on the taxpayer’s situation. You can look at Form 6251 for a complete list of adjustments.
AMT Exemptions and Tax Calculation
Once you’ve calculated your income for AMT purposes, you subtract out an exemption amount. For 2013, those amounts were $51,900 for single filers and $80,800 for married filers. (If your income is above certain levels, your exemption amount is reduced; see line 29 of Form 6251). The resulting number is your taxable income for AMT purposes.
If the amount is less than $179,500, you multiply the amount by 26% and compare it to the amount of “regular” tax you owe. Whichever amount is higher is the amount of tax you owe. If your AMT taxable income is above $179,500, a 28% tax rate applies. See Line 31 of Form 6251.
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