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RD
RD, Certified Public Accountant (CPA)
Category: Tax
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Just a quick question to verify that I am calculating regular

Customer Question

Just a quick question to verify that I am calculating regular tax and AMT correctly.

For regular federal tax purposes, consider that my taxable income after deductions and personal exemptions is $480000. Assuming no tax credits, what would the regular income tax be?

For AMT purposes, my adjusted gross income is $500000. Use $45,000 as the exemption amount. What is the total tax due under AMT?
Submitted: 4 years ago.
Category: Tax
Expert:  RD replied 4 years ago.
Chat Conversation Started
RD :

What year is the calculation for? What is your filing status?

Customer :

2010 but 2009 would be OK.

Customer :

My filing status is married filing jointly.

RD :

Based on the information you provided, the AMT exemption should be 0 as it would get phased out

RD :

If I take $45000 as the exemption amount than your regular tax is higher than the alternative minimum tax. Hence, you are not subject to AMT

RD :

Even if I were to take 0 AMT exemption, the regular tax is higher than the alternative minimum tax. Hence, you will not be subject to AMT

RD :

Based on 2009 tax rates, your federal regular tax is $138,362

RD :

and your AMT tax (with $45K exemption) is $123,900 and AMT tax (with $0 exemption) is $136,500

Customer :

Thank you for your input. You have confirmed that I have calculated the tax correctly. One point of clarification: The exemption amount is not an option since the standard exemption amount of $45,000 is reduced according to a formula based on the AGI. At 500,000 the exemption is reduced to 0. I do find it an interesting quirk of the AMT that the tax due at the higher amounts reverts to the regular tax at the higher levels of income.

RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
RD and other Tax Specialists are ready to help you
Expert:  RD replied 4 years ago.
The AMT exemption amount for 2009 is $70950. However, it phases out if the AMT income is over $150K. If your AMT income is above this threshold amount, the amount of your AMT exemption is lowered by $0.25 for ever $1 your AMT income is over this amount. For example, if you are single and your AMT income is $115,000, that is $2,500 over the threshold amount, so your exemption would be lowered by $625.So if you income is too high, the exemption is zero.

Since the highest tax rate for AMT purposes is 28% but for Regular tax purposes is 35%, at higher income levels, there is no AMT tax as it would be lower compared to regular tax.

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CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..