The AMT Advisor

Answers to All Your Alternative Minimum Tax Questions

An Outline of the Computation of the AMT Under the alternative minimum tax system, a taxpayer must determine his alternative minimum taxable income (AMTI) using the separate AMT rules, and then apply the AMT rates to his AMTI to determine his tentative minimum tax. The tentative minimum tax is reduced by any AMT foreign tax credit available to the taxpayer. If the taxpayer’s tentative minimum tax (after applying the AMT foreign tax credit) exceeds his regular tax, the excess of the tentative minimum tax over the regular tax is the taxpayer’s alternative minimum tax. All taxpayers that are subject to the regular tax are potentially subject to the alternative minimum tax. The basic formula for determining the 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. For a copy of Form 6251 and its instructions, got to the forms page. 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).

Special report on the changes to the Minimum Tax Credit How to submit a question to the AMT Advisor *************************** Alternative Minimum Tax Amounts: 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 : 2003, 2004, 2005 - $40,250 2006 - $42,500 2007 - $44,350 Married Filing Jointly or Qualifying Widower: 2003, 2004, 2005 - $58,000 2006 - $62,550 2007 - $66,250 Married Filing Separately: 2003, 2004, 2005 - $29,000 2006 - $31,275 2007 -$33,125