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Alternative Minimum Tax Rules

What is Alternative Minimum Tax?

Alternative Minimum Tax or AMT is a type of tax that is imposed on individuals, corporations, estates, and trusts by the United States federal government. The AMT is imposed at nearly a flat rate on an adjusted amount of taxable income that is above a certain threshold. Experts have answered many questions about alternative minimum tax rules, like the ones answered below.

Can the refund for an Alternative Minimum Tax Credit be larger than the amount of the Alternative Tax actually paid in?

If the person is filling out for the Alternative Minimum Tax and do the math on form 8801, then the person would notice that the refundable amount would be limited to the AMT paid in the previous years and cannot exceed the AMT that has been paid prior. When the person looks at this, then they will see that the AMT would not be larger than the amount of the AMT that was paid in.

How does the Alternative Minimum Tax differ from regular tax?

In regards to the Alternative Minimum Tax, this tax is an attempt to ensure that anyone that benefits from certain tax advantages will pay at least a minimum amount of tax that someone that has the same income should have to pay. The AMT is set up to where a person would pay the difference between their regular taxes and the AMT if the regular tax falls below the minimum that has be set up. When a person would generally pay less tax, then the AMT would step in and make it to where certain deductions would be eliminated and making the tax liability higher.

In the year 2009, the person paid an amount of $1933 in Alternative Minimum Tax and in 2010 paid $2130 in AMT, would the person need to file an amended 2010 form 8801 if they did not file it in 2010 when they file their 2011 taxes?

The person would need to fill out form 8801 from the year 2010 making it not necessary for the person to amend their 2010 taxes. In most cases if the person did not need to file the form in the previous year, then the person would not have the Alternative Minimum Tax, making the deduction unnecessary.

In the year 2011, if a person is filing married filing jointly with an income of $300,000, when would the Alternative Minimum Tax affect the person?

In most cases the Alternative Minimum Tax for married couple is $74,450 making the possibility of paying the AMT higher. The only time the AMT will generally effect a person is when they use deductions that are not allowed by the AMT such as; long-term capital gain at a reduced rate of 15%, state and local tax deductions, interest on home equity loans, medical deductions, etc. For a person to figure out how much, if any, AMT they owe, then they would fill out form 6251.

When a person files their taxes and they use certain deductions then they may be subject to Alternative Minimum Tax. When a person is figuring out if they owe this tax, they might get confused when it comes to what the AMT limitations are, how to figure out what if any the person owes, or how to apply for the AMT. When these concerns arise, then the person would need to contact an Expert to clear up the confusion.

Ask a Tax Professional

Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: General
Satisfied Customers: 572
Experience:  10 years experience
16356563
Type Your Tax Question Here...
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    Rate the answer you receive.

Tax Professionals are online & ready to help you now

Wallstreet Esq.
Tax Attorney
Satisfied Customers: 570
10 years experience
Wendy Reed
Enrolled Agent
Satisfied Customers: 3052
15+ years tax preparation and tax advice.
Mark D
Enrolled Agent
Satisfied Customers: 985
MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Recent Alternative Minimum Tax Questions

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    A medical device company is registered and operated in PA and its products are shipped to wholesaler/retailers in other state for sale. In this case, should this medical company file state income tax in other state? thanks
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    Can an LLC schedule K profit for a participating member (100% participating in the LLC and also majority member) offset a long-term loss from stocks accrued for that individual member? I have about 100K in loss carryover from previous years and will have a 40K profit from my LLC that I work at full time and receive guaranteed payments for this work.
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  • My wife and I continue to have unresolved Financial/Procedural

    My wife and I continue to have unresolved Financial/Procedural issues preventing us from filing our 2013 (thirteen) Federal and state taxes
    The issues are not so much "financially" detailed as they are "procedural"
    There are 3 main questions for which we request your assistance. We would need references to official documentation, where applicable, in case we require it. Thank you.
    1) I want to use my own CPA as I do not trust the CPA my wife wants to work with.
    Are we allowed to (i.e. are there any legal/procedural restrictions preventing us from) employing two different CPAs (ie "her" CPA, and "my" CPA), to complete:
    a) our federal taxes?
    b) our state taxes?
    If we are allowed to use two different CPAs, how would we file? I.e. Married/jointly; Married/separately…?
    2) If there are no such restrictions, How do we procedurally/legally(?) require the two CPAs to work together to submit all the necessary documentation? (My wife's current CPA may push back. I do not want his potential push back to impact already grossly delayed returns.)
    3) in investigating this "dual-CPA" issue ourselves, we started receiving some significantly disparate comments, all completely new, from the IRS regarding filing status for the past several years. We are unable to resolve The errors in the IRS database by email or by phone, despite providing the IRS copies of our returns as submitted and concomitant inputs to our joint banking account.
    During The years in question, we prepared and submitted, our own taxes (I.e. we did not use a CPA) and we always filed "MARRIED/JOINTLY." As such, my wife and I were BOTH required to sign the 1040 and all associated forms. Legally, since both the husband and the wife signed the joint return, are we BOTH responsible for any Subsequent impacts--either refunds or debts--incurred, if they exist at all?
    [I have prepared background information on the sources of our income if required. However, I would need to send this information directly to the respondent, to be used only by the respondent.]
    My apologies upfront: but considering the legal/tax implications involved, To be reimbursed, this question must be answered by a CPA (or a different titled position that is licensed to prepare, sign, and submit tax documentation for individuals) in the state of Virginia. While I do not know if "Megan C" meets the Virginia qualification, we would welcome her as an expert as well, certified in Virginia or not, given past performance with her.
    I fully understand, and expect that there will be an appropriate disclaimer, stating that your response will not be legally binding. I am just looking for direction at this point, and pointers toward reference material.
    THANK YOU
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