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What is the AMT?

AMT Exemption

AMT Adjustments

AMT Preferences

Minimum Tax Credit

AMT Forms


Alternative Minimum Tax Amounts

AMT Rates:

26%, up to Alternative Minimum Taxable Income (AMTI) of

2014 - $182,500 ($91,250 for married filing separately)

2013 - $179,500 ($89,750 for married filing separately)

28% on AMTI over the above amounts

AMT Exemption Amounts Before Phase-Out

Taxpayers Filing Single or Head of Household:

2010 - $47,450

2011 - $48,450

2012 - $50,600

2013 - $51,900

2014 - $52,800

Married Filing Jointly
or Qualifying Widower:

2010 - $72,450

2011 - $74,450

2012 - $78,750

2013 - $80,800

2014 - $82,100

Married Filing Separately:

2010 - $36,225

2011 - $37,225

2012 - $39,375

2013 - $40,400

2014 - $41,050


Phase-Out Thresholds

The AMT exemption is reduced by 25% of the amount that alternative minimum taxable income exceeds the threshold amounts listed below.

Single or Head of Household

2012 - $112,500

2013 - $115,400

2014 - $117,300

Married Filing Jointly or Qualifying Widowers

2012 - $150,000

2013 - $153,900

2014 - $156,500

Married Filing Separately

2012 - $75,000

2013 - $76,950

2014 - $78,250


AMT Exemption - Children Subject Kiddie Tax

For 2012

The lesser of $50,600
or the child's earned income plus $6,950

For 2013

The lesser of $51,900 or the child's earned income plus $7,150

For 2014

The lesser of $52,800
or the child's earned income plus $7,250


The AMT Exemption

Because the alternative minimum tax (AMT) was never intended to apply to
lower and middle income taxpayers who have small amounts of AMT adjustment or preference items, a feature was built into the system to prevent this from occurring. This feature is the AMT exemption.

The AMT exemption is an amount that a taxpayer is allowed to deduct from
alternative minimum taxable income before calculating the taxpayer’s AMT
liability. The exemption for a particular taxpayer depends on the taxpayer’s
filing status. To prevent upper-income taxpayers from benefiting from the AMT exemption, the exemption phases out after a taxpayer’s AMTI reaches a certain level, also based on the taxpayer’s filing status.


AMT Exemption Amounts - 2014

For 2014, the AMT exemption amounts for taxpayers not subject to the
exemption phase-out are:







A child subject to the kiddie tax rules for regular tax purposes determines his or her AMT exemption under special rules In Code Sec. 59(j)(1). The AMT exemption for a child subject to the kiddie tax is the lesser of the AMT
exemption for a single taxpayer or the total of the child's earned income plus $5,000, indexed for inflation. For 2014, the amount indexed for inflation is $7,250.


Exemption Phase-Out and Phase-Out Thresholds - 2014

Exemption phase-out formula: The exemption amount is reduced one dollar for every four dollars of AMTI above the threshold amount for the taxpayer’s filing status.

Exemption phase-out thresholds: The phase-out thresholds are:







EXAMPLE: Tim and Heather, a couple filing jointly, have AMTI of $175,000 in 2014. Their AMT exemption is $77,475, which is the full exemption amount of $82,100 less .25 x ($175,000 - $156,500) or $4,625.


AMTI level of complete phase-out: Because the AMT exemption phase-out is controlled by the amount of the exemption for a filing status and the amount that AMTI exceeds the phase-out threshold for that filing status, there is a common AMTI level where the exemption for each filing status phases out completely for all taxpayers in the filing status. The exemption phases out completely at the following levels of AMTI in 2014:







Practical Effect of the Exemption Phase-out

Although taxpayers with AMTI above the phase-out threshold still calculate
their AMT liability using the same rate as taxpayers that are not subject to
exemption phase-out, the loss of the exemption raises the taxpayer’s effective AMT tax rate. This occurs because for each $1 of income in the phase-out range, the amount of AMTI actually subject to tax increases by $1.25. This results in an effective AMT rate of 35% (instead of 28%) for AMTI in the phase-out range.


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Filing Status

Amounts

Single or Head of Household

$52,800

Married Filing Jointly or Surviving Spouse

$82,100

Married Filing Separately

$41,050

Filing Status

AMTI

Single or Head of Household

$117,300

Married Filing Jointly or Qualifying Widower

$156,500

Married Filing Separately

$78,250

Filing Status

AMTI

Single or Head of Household

$328,500

Married Filing Jointly or Surviving Spouse

$484,900

Married Filing Separately

$242,450

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