What is Alternative Minimum Tax ?
The Alternative Minimum Tax (AMT) is a parallel tax system in the United States designed to ensure that high-income earners and corporations pay a minimum amount of taxes.
How Alternative Minimum Tax Works ?
The AMT operates alongside the regular income tax system, and taxpayers must calculate their tax liability under both systems, paying the higher of the two amounts.
Who Qualifies for Alternative Minimum Tax ?
AMT applies to both individuals and corporations. Taxpayers who have a higher income and significant deductions or credits may be subject to AMT.
Alternative Minimum Tax Exemption
In 2023, the AMT exemption amounts are $81,300 for single filers and $126,500 for married couples filing jointly. Taxpayers who earn above these amounts may be subject to the AMT.
Alternative Minimum Tax Rates
For 2023, the 28% rate applies to excess AMTI of $220,700 or more for all taxpayers & $110,350 for married couples filing separate returns. The 26% rate applies to incomes up to those levels.
How to Claim Alternative Minimum Tax ?
Once you have completed Form 6251, you will need to include it with your tax return. If you are filing electronically, the software should prompt you to complete it if necessary.
How to Calculate Alternative Minimum Tax ?
To calculate your AMT liability, you will need to use IRS Form 6251. This form requires you to make several adjustments to your income and deductions.