Are You Subject to the Alternative Minimum Tax?Published:
The Alternative Minimum Tax (AMT) is an extra tax that some people are required to pay in addition to their regular income tax. There are several alternative minimum tax strategies that you can implement to better your chance of cutting back on how much additional money you will owe.
The main goal of the alternative minimum tax is to prevent high-earners from using tax strategies and special benefits to greatly decrease their tax liability. Over the years, however, the alternative minimum tax has changed quite a bit. Currently, it affects many taxpayers ? including those who do not have very high income.
Believe it or not, many people don’t know if they are subject to the alternative minimum tax. In turn, their tax strategies suffer and they are unable to adequately plan for the future. Your best alternative minimum tax strategy is to first determine whether or not this tax is going to affect you.
There are several things that can cause alternative minimum tax liability. The most common AMT triggers include the following:
– Personal exemptions
– Medical expenses
– Incentive stock options
– Tax-exempt interest
– Long-term capital gains
The alternative minimum tax is distinguished by the following characteristics:
– Tax benefits that are usually available are eliminated or reduced
– There is a tax deduction, known as the alternative minimum tax exemption, which helps prevent alternative minimum tax for those with modest income
– Alternative minimum tax rates start at 26% and increase to 28% for higher income levels
Compare the above information to standard income tax rates, which start at 10% and gradually increase several brackets before hitting the tops rate of 35%.
For more information about the alternative minimum tax, please visit the following websites: