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Work Of AMT Credit

Wednesday, December 26, 2012 - 2:38 AM
Hello Community,

Originally signed into law in 1969, the Alternative Minimum Tax, or AMT, is an alternative to the income tax that eliminates most deductions in place of a lower base tax rate and a single large exemption. This is frequently referred to as an AMT credit. When Congress passed it, their intent was to ensure that certain very high income taxpayers could not use loopholes to avoid paying taxes. Over the years, though, it ensnares millions of middle-income taxpayers.

Falling into the AMT: it tends to ensnare upper-middle and lower-upper-class taxpayers. It has a disproportionately large impact on people with large families who reside in high tax states or on people with large quantities of itemized deductions other than charitable giving or mortgage interest.

Calculating AMT Income: Calculating your AMT income starts with your taxable income before exemptions from line 41 of your 1040. You will need to add back in any standard deduction that you took, as well as any medical and dental expenses that you wrote off, any state or local taxes that you deducted.


Best Regards,
Tony Stevenson

Tax Calculator

 
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TonyStevensonTonyStevenson6 posts since
Oct 18, 2012
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