Six Facts to Know about
the Alternative Minimum Tax
The Alternative
Minimum Tax attempts to ensure that anyone who benefits from
certain tax advantages pays at least a minimum amount of tax.
The AMT provides an alternative set of rules for calculating
your income tax. In general, these rules should determine the
minimum amount of tax that someone with your income should be
required to pay. If your regular tax falls below this minimum,
you have to make up the difference by paying alternative minimum
tax.
Here are six facts
the Internal Revenue Service wants you to know about the AMT and
changes for 2010.
1. Tax laws provide
tax benefits for certain kinds of income and allow special
deductions and credits for certain expenses. These benefits can
drastically reduce some taxpayers’ tax obligations. Congress
created the AMT in 1969, targeting higher-income taxpayers who
could claim so many deductions they owed little or no income
tax.
2. Because the AMT
is not indexed for inflation, a growing number of middle-income
taxpayers are discovering they are subject to the AMT.
3. You may have to
pay the AMT if your taxable income for regular tax purposes plus
any adjustments and preference items that apply to you are more
than the AMT exemption amount.
4. The AMT exemption
amounts are set by law for each filing status.
5. For tax year
2010, Congress raised the AMT exemption amounts to the following
levels:
-
$72,450 for a
married couple filing a joint return and qualifying widows
and widowers;
-
$47,450 for
singles and heads of household;
-
$36,225 for a
married person filing separately.
6. The minimum AMT
exemption amount for a child whose unearned income is taxed at
the parents' tax rate has increased to $6,700 for 2010.
Use the IRS AMT
Assistant to determine whether you may be subject to the AMT.
Taxpayers can find more information about the Alternative
Minimum Tax and how it impacts them by accessing IRS Form 6251,
Alternative Minimum Tax —Individuals, and its instructions at
http://www.irs.gov
or by calling 800-TAX-FORM (800-829-3676).
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