If you make that much income or more, that’s the AMT taxable income. You may have to calculate your alternative minimum taxable income and pay the higher tax. Once you qualify for the AMT in a tax year, you must pay it, but you can adjust your spending to reduce the AMT for the following year.
What does AMT Due mean?
The alternative minimum tax (AMT) is calculated using a different set of rules meant to ensure certain taxpayers pay at least a minimum amount of income tax. AMT calculations limit certain breaks for some taxpayers so their tax bill is higher. AMT rates are 26% or 28%.
Why was the Amt put in place in the first place?
The AMT is a secondary tax put in place to prevent the wealthy from artificially reducing their tax bill through the use of tax preference items. The idea was that people who had very high incomes should not be able to use certain deductions to lower their tax bill below what should be reasonably expected for taxpayers at their income level.
When does the exemption for AMT go away?
The exemption is subtracted from income to get AMT taxable income. Above $150,000 of AMT taxable income the exemption shrinks, phasing out at 25 cents for every dollar of more income. As AMT taxable income rises over $175,000 the next dollars are effectively taxed for AMT at 35% (28% + 0.25* 28%).
What do you need to know about the Amt for 2017?
For 2017, the numbers start at just $54,300 for single taxpayers: Income isn’t the sole trigger. AMT only applies if you report certain types of income that receive tax-favorable tax treatment or if you claim certain kinds of deductions. Some of those include: Exercising incentive stock options (ISO).
How are high income earners affected by the Amt?
High dollar earners generally have high-dollar expenses. They may have more expensive houses, live in high tax areas and spend more money on investments. By maximizing their deductions, and not including certain kinds of income, they were able to decrease their taxable income to practically zero – legally.
