Alternative Minimum Tax (AMT)
The Alternative Minimum Tax (AMT) is different from regular income tax. It is a result of two kinds of adjustments and preferences - deferral and exclusion items. Generally, deferral items do not lead to permanent difference in taxable income over time. On the other hand, Exclusion items lead to a permanent difference.
AMT is applied to taxpayers with high income who benefit from a lower regular tax because of certain types of income being taxed at a lower rate and from some deductions. A limit is set on those benefits by the AMT. In the event that the total tax would be reduced to below the AMT limit by the tax benefits, the taxpayer will be required to pay the higher AMT amount. There are two AMT tax brackets: 26% and 28%.
There are several changes that were made to AMT by the Tax Cuts and Jobs Act of 2017. These include the increase of the exemption amount, doubling the exemption phase-out, and the reduction or repealing of some preference items. Therefore, taxpayers who may have been eligible for AMT before tax year 2018 may lose their eligibility in the subsequent years.
|
2017 |
2018 |
2019 |
2020 |
2021 |
2022 |
|
Single |
$54,300 |
$70,300 |
$71,700 |
$72,900 |
$73,600 |
$75,900 |
|
MFJ |
$84,500 |
$109,400 |
$111,700 |
$113,400 |
$114,600 |
$118,100 |
|
HOH |
$54,300 |
$70,300 |
$71,700 |
$72,900 |
$73,600 |
$75,900 |
|
MFS |
$42,250 |
$54,700 |
$55,850 |
$56,700 |
$57,300 |
$59,050 |
|
QW |
$84,500 |
$109,400 |
$111,700 |
$113,400 |
$114,600 |
$118,100 |
|
Single |
$187,800 |
$191,100 |
$194,800 |
$197,900 |
$199,900 |
$206,100 |
|
MFJ |
$187,800 |
$191,100 |
$194,800 |
$197,900 |
$199,900 |
$206,100 |
|
HOH |
$187,800 |
$191,000 |
$194,800 |
$197,900 |
$199,900 |
$206,100 |
|
MFS |
$93,900 |
$95,500 |
$97,400 |
$98,950 |
$99,950 |
$103,050 |
|
QW |
$187,800 |
$191,100 |
$194,800 |
$197,900 |
$199,900 |
$206,100 |
|
Single |
$120,700 |
$500,000 |
$510,300 |
$518,400 |
$523,600 |
$539,900 |
|
MFJ |
$160,900 |
$1,000,000 |
$1,020,600 |
$1,036,800 |
$1,047,200 |
$1,079,800 |
|
HOH |
$120,700 |
$500,000 |
$510,300 |
$518,400 |
$523,600 |
$539,900 |
|
MFS |
$80,450 |
$500,000 |
$510,300 |
$518,400 |
$523,600 |
$539,900 |
|
QW |
$160,900 |
$1,000,000 |
$1,020,600 |
$1,036,800 |
$1,047,200 |
$1,079,800 |
From 6215 must be completed in the event that the taxpayer claimed any of the following items:
- Accelerated Depreciation
- Tax exempt interest from private activity bonds
- Net operating loss deduction
- Alternative fuel vehicle refueling property tax
- Qualified electric vehicle credit
- Foreign tax credit
- Net qualified disaster loss as well as the return is reporting the standard deduction on Schedule A
- Section 1202 exclusion
- Amortization of pollution-control facilities or depletion
- Any Form 3800 general business credit, in case either line 6 (in Part I) or line 25 is greater than zero
- Credit for prior year minimum tax
- Investment interest expense reported on Form 4952
- Income (or loss) from tax-shelter farm activities or passive activities, partnerships, S corporations, or activities for which the taxpayer is not at risk
- Income from long-term contracts not figured using the percentage-of-completion method
- Intangible drilling, circulation, research, experimental or mining costs
- AMT adjustments from an estate, trust, electing large partnership, or cooperative
- Stock by exercising an incentive stock option and failure to dispose the stock in the very year
AMT rules are more complicated than those for regular income tax. Taxx Savage Pro computes AMT in the event it is owed.
To add or edit Form 6215:
- Go to the Main Menu of the tax return (Form 1040)
- From the menu, select Other taxes
- Then Alternative Minimum Tax (6251)
Credit For Prior Year Minimum Tax
In the event you are not liable for AMT in the current year, but you had paid AMT in at least one of the prior years, you may be eligible for special minimum tax credit against your regular tax in the current year. Form 8801, Credit for Prior Year Minimum Tax - Individuals, Estates and Trusts, is completed and attached in the event that a taxpayer is eligible. To access Form 8801:
- Go to the Main Menu of the tax return (Form 1040)
- From the menu, select Credits
- Then Prior Year Minimum Tax Credit (8801)
Note: This is not tax advice. It is a guide on how to enter Alternative Minimum Tax into the Taxx Savage Pro program.
Additional Information:
IRS: Instructions for Form 6251, Alternative Minimum Tax - Individuals
Tax Topic 556, Alternative Minimum Tax