The Alternative Minimum Tax
The alternative minimum tax (AMT) was created to ensure that taxpayers at certain higher income levels pay some amount of tax. A taxpayer who reduces or eliminates the regular tax through various deductions and exclusions still may find himself or herself subject to the AMT.
A taxpayer may have to pay the AMT if taxable income for regular tax purposes (Chapter 32), combined with certain adjustments and tax preference items under the AMT rules (defined later), exceeds a certain threshold.
There is no way to know with certainty before completing a taxpayer's return if he or she is subject to the AMT. Instead, Form 6251, Alternative Minimum Tax—Individuals, must be completed to determine whether any AMT liability exists.
Overview of the AMT
The AMT applies to a taxpayer who has certain types of income or deductions that receive favorable treatment for regular tax purposes but are not allowed for AMT purposes. The AMT has its own rules about taxable income and allowable deductions. Some deductions allowed under the regular tax system are not allowed at all under the AMT, while others are allowed only to a limited extent under the AMT. The AMT, which ...