Alternative Minimum Tax (AMT)

The alternative minimum tax (AMT) is an additional tax that is calculated separately from a taxpayer's regular tax and paid in addition to the regular tax.
The amount of an individual taxpayer's AMT is the difference between his tentative minimum tax calculated under the AMT rules and his regular tax amount. If the taxpayer's tentative minimum tax amount is lower than his regular tax amount for the year, the taxpayer does not owe any AMT.

The basic formula for calculating AMT is as follows:

NOTE: This formula is for use only in estimating the amount of a taxpayer’s AMT liability. In order to determine the actual liability, a taxpayer must use Form 6251.

Starting Point Regular Taxable income

Plus/Minus AMT Adjustments

Plus AMT Preference items

Less AMT Exemption

Equals Alternative Minimum Taxable Income (AMTI)

Multiplied by AMT rates

Equals Tentative Minimum Tax (before credits)

Minus AMT Foreign Tax Credit

Equals Tentative Minimum Tax

Less Regular Tax

Equals Net Alternative Minimum Tax

If the net alternative minimum tax is a positive amount, the taxpayer must pay
this amount in addition to his regular tax (less applicable non-refundable
credits).

What Is The Alternative Minimum Tax (AMT)

Form 6251: Reporting AMT on Tax Return

Post Updated May 2, 2015