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| The AMT Advisor |
| Answers to All Your Alternative Minimum Tax Questions |
Are you subject to the AMT? All taxpayers who are subject to the regular tax are potentially subject to the AMT. You can determine if you are subject to the AMT by filling out the worksheet below.
To use the worksheet, you must first calculate your regular tax using Form 1040 and whatever schedules and other forms are applicable in your situation. If you would like the AMT Advisor to determine if you are subject to the AMT for you, click here to find out how to request this service.
definitively tell you that you are not subject to the AMT. If the results indicate that you may be subject to the AMT, you must fill out a Form 6251, Alternative Minimum Tax - Individuals, to determine whether or not you are subject to the AMT. If it turns out that you are not subject to the AMT, your effort will not be wasted because the IRS requires taxpayers that the worksheet indicates may be subject the AMT to file a Form 6251 to prove that they are not subject to it.
shows you to be subject to the AMT, you must fill out (and file) Form 6251 if you claim or have received any of the following items: 1. Accelerated depreciation 2. Stock you received by exercising an incentive stock option that you did not dispose of in the same year. 3. Tax-exempt interest from private activity bonds. 4. Intangible drilling, circulation, research, experimental or mining costs. 5. Amortization of pollution control facilities. 6. Income or loss from tax-shelter farm activities or passive activities. 7. Income from long-term contracts not calculated using the percentage-of- completion method. 8. Interest paid on a home mortgage not used to buy, build, or substantially improve your home. 9. Investment interest expense reported on Form 4952, Investment Interest Expense Deduction. 10. Net operating loss deduction. 11. Alternative minimum tax adjustments from an estate, trust, electing large partnership, or cooperative. 12. A Code Section 1202 exclusion. 1. Are you filing Schedule A? Yes. Enter the amount from Form 1040, line 41.... . . . . . . . . . . . . .1. _______ No. Enter the amount from Form 1040, line 38, and go to line 5. 2. Enter the smaller of the amount on Schedule A, line 4, or 2.5% (.025) of the amount on Form 1040, line 38 . . . . . . . . . . . . . 2. _______ 3. Enter the total of amounts from Schedule A, lines 9 and 26 . . . . 3. _______ 4. Add lines 1 through 3 above . . . . . . . . . . . . . . . . . . . . . . . . . . . .4. _______ 5. Enter any tax refund from Form 1040 lines 10 and 21 . . . . . . . . .5. _______ 6. Subtract line 5 from line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. _______ 7. Enter the amount from Form 8914, line 2 . . . . . . . . . . . . . . . . . .7. _______ 8. Subtract line 7 from line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. _______ 9. Enter the amount shown below for your filing status. • Single or head of household—$40,250 • Married filing jointly or qualifying widow(er)—$58,000 }. . . . . . . . . 9. _______ • Married filing separately—$29,000 10. Is the amount on line 9 more than the amount on line 8? No. You do not need to fill in Form 6251. STOP. Yes. Subtract line 9 from line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10._______ 11. Enter the amount shown below for your filing status. • Single or head of household—$112,500 • Married filing jointly or qualifying widow(er)—$150,000 }. . . . . . . 11._______ • Married filing separately—$75,000 12. Is the amount on line 8 more than the amount on line 11? No. Enter the amount from line 10 on line 14 and go to line 15. Yes. Subtract line 11 from line 8 . . . . . . . . . . . . . . . . . . . . . . . . . .12._______ 13. Multiply line 8 by 25% (.25) and enter the result but do not enter more than line 9 above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13._______ 14. Add lines 10 and 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14._______ 15. Is the amount on line 14 more than $175,000 ($87,500 if married filing separately)? Yes. STOP* Fill in Form 6251 to see if you owe the alternative minimum tax. No. Multiply line 14 by 26% (.26) . . . . . . . . . . . . . . . . . . . . . . . . . 15.______ 16. Enter the amount from Form 1040, line 44, minus the total of any tax from Form 4972, Tax on Lump Sum Distributions and any amount on Form 1040, line 47. If you used Schedule J to calculate your tax, the amounts for lines 44 and 47 of Form 1040 must be recalculated without using Schedule J. . . . . . . . . . . 16.______ 17. Is the amount on line 15 more than the amount on line 16? Yes. Fill in Form 6251 to see if you owe the alternative minimum tax.* No. You do not need to fill in Form 6251. *If you are not subject to the AMT, file the filled out Form 6251 with your return to show the IRS that you are not subject to it. |
Special report on the changes to the Minimum Tax Credit How the AMT is calculated How to submit a question to the AMT Advisor **************************** Alternative Minimum Tax Facts: AMT Rates: 26%, up to Alternative Minimum Taxable Income of $175,000 ($87,500 for Married Filing Separately) 28% on AMTI over $175,000 ($87,500 for Married Filing Separately) AMT Exemption Amounts Before Phase-Out: Taxpayers Filing Single or Head of Household : 2004, 2005 - $40,250 2006 - $42,500 2007 - $33,750 Married Filing Jointly or Qualifying Widower: 2004, 2005 - $58,000 2006 - $62,550 2007 - $45,000 Married Filing Separately: 2004, 2005 - $29,000 2006 - $31,275 2007 -$22,500 AMT Exemption for Children Under 18 (Under 14 for Years Before 2006) (Kiddie AMT) For 2004, and 2005 The lesser of $40,250 or the child's earned income plus $5,600 (2003), $5,750 (2004), or $5,850 (2005) For 2006 The lesser of $42,500 or the child's earned income plus $6,050 For 2007 The lesser of $33,750 or the child's earned income plus $6,300 |
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