Form 6251: Alternative Minimum Tax-Individuals

What Is Form 6251: Alternative Minimum Tax-Individuals?

Form 6251: Alternative Minimum Tax-Individuals is an Internal Revenue Service (IRS) tax form used to determine the amount of alternative minimum tax (AMT) that a taxpayer may owe. Some taxpayers with higher incomes can claim certain deductions that allow them to reduce their regular tax obligation. The AMT sets an upper limit on how much that deduction can be as a way of ensuring that wealthier individuals pay an adequate amount of taxes. If you are among those to whom it applies, you'll pay the AMT instead of standard income taxes.

Key Takeaways

  • Form 6251 is used to determine if taxpayers owe alternative minimum tax instead of standard income tax.
  • The AMT was designed to ensure that the wealthy pay their fair share of taxes.
  • Changes to the AMT that were part of the Tax Cuts and Jobs Act greatly reduced how many taxpayers are required to pay it.
  • The IRS raised the AMT in 2023 to $81,300 (75,900 in 2022) for individuals and $126,500 ($118,100 in 2022) for joint filers who are married.
  • Created in 1969, the AMT is a tax system parallel to the regular income tax.

Understanding Form 6251: Alternative Minimum Tax-Individuals

Each taxpayer must evaluate whether or not they must pay AMT each year. Depending on your income level, you may not need to.

The AMT is a tax system parallel to the regular income tax. It was enacted in 1969 and was originally designed to identify and collect taxes owed by a limited number of wealthy individuals and families who were otherwise avoiding income taxes.

It does this by limiting the number of itemized deductions that can be claimed by a taxpayer. Deductions for state and local taxes are not allowed, for example. In addition, taxpayers impacted by the AMT cannot take the standard deduction.

The AMT has two rates (26% and 28%) versus the seven federal tax brackets, which range from 10% to 37%.

How to File Form 6251: Alternative Minimum Tax-Individuals

Form 1040: U.S. Individual tax Return includes a worksheet that allows a taxpayer to determine whether AMT is owed, but it only provides basic computations. Form 6251 is more detailed and will give a more accurate answer, and simply completing it does not mean that it has to be filed. Alternatively, you can use tax software or enlist a tax pro. Only if there is AMT owed will Form 6251 have to be attached to Form 1040.

The AMT requires affected taxpayers to calculate their tax bill under the ordinary income tax system and again under the AMT, paying the higher of the two amounts. After calculating your AMT, you can claim an exemption based on your filing status.

The AMT exemption is much higher than the standard exemption but phases out when you reach a certain income level. In 2023, the AMT exemption for individual filers is $81,300 ($75,900 in 2022) and for married joint filers, $126,500 ($118,100 in 2022). The exemption begins to phase out when income reaches $578,150 for individual filers and $1,156,300 for married joint filers.

form 6251

All pages of Form 6251 are available on the IRS website.

Special Considerations

A lack of inflation adjustments caused the AMT to apply to a much larger group of taxpayers than originally intended. Congress had passed annual inflation adjustments to limit the reach of the AMT before instituting a permanent fix of indexing future exemption levels to inflation as part of the American Taxpayer Relief Act of 2012.

The AMT collected $4.7 billion in 2019, about 0.3% of individual income tax revenue but significantly less than the $36.2 billion collected in 2017. This decrease was mainly due to changes to the AMT that were part of the Tax Cuts and Jobs Act (TCJA) of 2017. Starting in 2018, for example, TCJA triggered a higher AMT exemption and the level at which the exemption begins to phase out.

Article Sources
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  1. Internal Revenue Service. "About Form 6251, Alternative Minimum Tax-Individuals."

  2. Internal Revenue Service. "Six Facts the IRS Wants You to Know About the Alternative Minimum Tax."

  3. U.S. Congress. "H.R.1 - An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018."

  4. Internal Revenue Service. "IRS Provides Tax Inflation Adjustments for Tax Year 2023."

  5. U.S. Government of Accountability Office. "Alternative Minimum Tax: An Overview of Its Rationale and Impact on Individual Taxpayers," Page 1.

  6. Internal Revenue Service. "Instructions for Form 6251," Page 2.

  7. Internal Revenue Service. "Instructions for Form 6251 Alternative Minimum Tax—Individuals," Page 9,12.

  8. Internal Revenue Service. "Instructions for Form 1040."

  9. Internal Revenue Service. "Instructions for Form 6251," Page 1.

  10. Internal Revenue Service. "Form 6251."

  11. U.S. Congress. "H.R.8 - American Taxpayer Relief Act of 2012."

  12. Tax Policy Center. "How Much Revenue Does the AMT Raise?"

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