By: Martin M. Shenkman, CPA, MBA, JD
This is a second parallel tax system that many wealthier taxpayers will have to consider when calculating their tax. The alternative minimum tax (AMT) is calculated by starting with your taxable income calculated according to the regular tax rules. Add certain tax preference items and adjustments required by the AMT. Only certain itemized deductions are allowed. Next, subtract an exemption amount. The result is multiplied by the amount rate for individuals. If the tax due exceeds the tax you owe under the regular tax system, you must pay the larger alternative minimum tax.
Subscribe to our email list to receive information on consumer webcasts and blogs, for practical legal information in simple English, delivered to your inbox. For more professional driven information, please visit Shenkman Law to subscribe.