CFP

By Investopedia AAA

Alternative Minimum Tax - Introduction

The alternative minimum tax (AMT) is a separate method of calculating tax liability to ensure that no taxpayer with substantial income can avoid significant tax liability by utilizing tax-exempt investments, credits, exclusions and deductions. It is applied in cases where the AMT calculation results in a higher tax liability than the regular income tax calculation.

There are no specific tests to use to determine if you are exposed to the AMT. You must first figure out your regular income tax figures. After this is done, taxpayers use Form 6251 to compute AMT liability if needed. If a taxpayer has any AMT adjustment or preference items, they will generally be added back into the taxable income to compute the amount of AMT income (AMTI). Common Items Subject to the Alternative Minimum Tax

You May Also Like

Related Articles
  1. Trading Strategies

    The 10 Worst Mistakes Beginner Traders ...

  2. Trading Strategies

    Rise and Shine With This Pre-Market ...

  3. Options & Futures

    Avoid These 10 Mistakes When Trading ...

  4. Trading Strategies

    5 Ways To Adapt To Tough Markets

  5. Professionals

    Want To Be A Financial Planner? Eye ...

Trading Center