This is the form to fill out for the AMT.
Begin with Calculating your AMT - IRS assistance site click here
Tuesday, September 27, 2011
Facts about the Alternaive Minimum Tax
This is taken from the IRS website:
Six Facts the IRS Wants You to Know about the Alternative Minimum Tax
IRS Tax Tip 2011-47, March 8, 2011
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.
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.
Because the AMT is not indexed for inflation, a growing number of middle-income taxpayers are discovering they are subject to the AMT.
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.
The AMT exemption amounts are set by law for each filing status.
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).
Six Facts the IRS Wants You to Know about the Alternative Minimum Tax
IRS Tax Tip 2011-47, March 8, 2011
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.
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.
Because the AMT is not indexed for inflation, a growing number of middle-income taxpayers are discovering they are subject to the AMT.
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.
The AMT exemption amounts are set by law for each filing status.
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).
Alternative Minimum Tax Assistance
Alternative Minimum Tax (AMT) Assistant for Individuals
Every year taxpayers need to consider whether they will have to pay the Alternative Minimum Tax (AMT). The AMT Assistant is intended to provide a simple test for taxpayers who fill out their tax returns without using software to determine whether they may be subject to the AMT.
Using the AMT Assistant
The AMT Assistant is easy to use. You just answer a few simple questions about entries on your draft 1040 and the system does the rest. You will see the results immediately on your computer screen. Based on your entries, the results will tell you that either you do not owe the AMT or that you must go further and complete Form 6251 to find out if you owe the AMT.
Your entries are anonymous and the information will be used only for the purpose of determining your eligibility. All entries are erased when you exit or start over. See the “IRS Privacy Policy” for more information.
The Assistant can be used by individuals, tax practitioners and community or public service organizations.
Main AMT assitance page
Begin with Calculating your AMT - IRS assistance site click here
Every year taxpayers need to consider whether they will have to pay the Alternative Minimum Tax (AMT). The AMT Assistant is intended to provide a simple test for taxpayers who fill out their tax returns without using software to determine whether they may be subject to the AMT.
Using the AMT Assistant
The AMT Assistant is easy to use. You just answer a few simple questions about entries on your draft 1040 and the system does the rest. You will see the results immediately on your computer screen. Based on your entries, the results will tell you that either you do not owe the AMT or that you must go further and complete Form 6251 to find out if you owe the AMT.
Your entries are anonymous and the information will be used only for the purpose of determining your eligibility. All entries are erased when you exit or start over. See the “IRS Privacy Policy” for more information.
The Assistant can be used by individuals, tax practitioners and community or public service organizations.
Main AMT assitance page
Begin with Calculating your AMT - IRS assistance site click here
IRS topic 556 Alternative Minimum Tax
Topic 556 - Alternative Minimum Tax
The tax laws provide tax benefits for certain kinds of income and allow special deductions and credits for certain kinds of expenses. The alternative minimum tax (AMT) attempts to ensure that anyone who benefits from these tax advantages pays at least a minimum amount of tax.
The AMT is a separately figured tax that eliminates many deductions and credits, thus increasing tax liability for an individual who would otherwise pay less tax. The tentative minimum tax rates on ordinary income are percentages set by law. For capital gains and certain dividends, the rates in effect for the regular tax are used.
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. The exemption amounts are set by law for each filing status and are listed in the Form 6251 Instructions.
To find out if you may be subject to the AMT, refer to the Form 1040 Instructions and the Form 1040A Instructions. If you are filing the Form 1040 you may use the AMT Assistant for Individuals, which is an electronic version of the AMT worksheet available on the IRS webpage at www.irs.gov. The AMT worksheet may tell you that you do not owe the AMT or it may direct you to Form 6251, Alternative Minimum Tax - Individuals. If you are directed to Form 6251, you will have to complete that form to determine whether you owe the AMT. Form 6251 (PDF), Alternative Minimum Tax - Individuals, is available in a PDF format on the IRS web page.
If you are not liable for AMT this year, but you paid AMT in one or more previous years, you may be eligible to take a special minimum tax credit against your regular tax this year. If eligible, you should complete and attach Form 8801 (PDF), Credit for Prior Year Minimum Tax - Individuals, Estates, and Trusts.
The tax laws provide tax benefits for certain kinds of income and allow special deductions and credits for certain kinds of expenses. The alternative minimum tax (AMT) attempts to ensure that anyone who benefits from these tax advantages pays at least a minimum amount of tax.
The AMT is a separately figured tax that eliminates many deductions and credits, thus increasing tax liability for an individual who would otherwise pay less tax. The tentative minimum tax rates on ordinary income are percentages set by law. For capital gains and certain dividends, the rates in effect for the regular tax are used.
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. The exemption amounts are set by law for each filing status and are listed in the Form 6251 Instructions.
To find out if you may be subject to the AMT, refer to the Form 1040 Instructions and the Form 1040A Instructions. If you are filing the Form 1040 you may use the AMT Assistant for Individuals, which is an electronic version of the AMT worksheet available on the IRS webpage at www.irs.gov. The AMT worksheet may tell you that you do not owe the AMT or it may direct you to Form 6251, Alternative Minimum Tax - Individuals. If you are directed to Form 6251, you will have to complete that form to determine whether you owe the AMT. Form 6251 (PDF), Alternative Minimum Tax - Individuals, is available in a PDF format on the IRS web page.
If you are not liable for AMT this year, but you paid AMT in one or more previous years, you may be eligible to take a special minimum tax credit against your regular tax this year. If eligible, you should complete and attach Form 8801 (PDF), Credit for Prior Year Minimum Tax - Individuals, Estates, and Trusts.
Turbo Tax answeres the AMT common questions
This is taken from the turbo tax website.
Alternative Minimum Tax: Common Questions
Updated for Tax Year: 2010 The Alternative Minimum Tax (AMT) was designed to keep wealthy taxpayers from using loopholes to avoid paying taxes. But because it's not automatically updated for inflation, more middle-class taxpayers are getting hit with the AMT. Although Congress implemented a patch for 2009, it has not yet done so for 2010. These FAQs can help you decide if you are still at risk of falling under the AMT.
AMT Concerns Growing
Each year, more and more taxpayers discover, to their dismay, that they are subject to the Alternative Minimum Tax (AMT), which knocks out a lot of exemptions, deductions and credits they may have benefited from when doing their regular income taxes. Here are the answers to some common questions about the dreaded AMT, starting with information about a recent change that protects an estimated 21 million taxpayers from falling victim to the AMT when they file their 2010 returns.
How did Congress change the Alternative Minimum Tax for 2010 and 2011?
Why does the AMT exist?
What is the Alternative Minimum Tax?
Why are middle-class folks being hit with the AMT?
Why would I have to pay the AMT?
How can I avoid the AMT?
What happens to my tax credits?
How can I plan ahead for the AMT?
How did Congress change the AMT for 2010 and 2011?
As part of the 2010 Tax Relief Act, Congress revised the exemption amounts used in making AMT computations for 2010 and 2011. The AMT exemption is basically a standard deduction for taxpayers hit by the alternative minimum tax.
Without the revised exemptions, an estimated 21 million taxpayers would have fallen into the grasp of the AMT—boosting their tax bills by an average of more than $6,000 each. As a group, the taxpayers would have paid an extra $136 billion in taxes.
The patch that was approved by Congress and signed into law by President Obama, prevents that from happening.
Under the new law, the 2010 exemption amounts are:
Single taxpayers: $47,450
Married taxpayers filing jointly: $72,450
Married filing separately: $36,225
Head of Household: $47,450
For 2011, the exemption amounts are:
Single taxpayers: $48,450
Married taxpayers filing jointly: $74,450
Married filing separately: $37,225
Head of Household: $48,450
Why does the AMT exist?
In 1969, Congress noticed that 155 people with high incomes were legally using so many deductions and other tax breaks that they were paying absolutely nothing in federal income taxes. Their nonexistent tax bills were an embarrassment.
So Congress instituted the AMT with the aim of making the tax system fairer. But because the AMT was never indexed to inflation—as the regular income tax is—each year, more and more middle-income taxpayers are snared by a tax originally targeted at the rich.
The annual "patch" is Congress’s attempt to slow down the expansion of the AMT to taxpayers to whom it was never intended to apply.
What is the Alternative Minimum Tax?
The AMT is a parallel tax system that operates in the shadow of the regular tax, expanding the amount of income that is taxed by adding items that are tax-free under the regular tax system and disallowing many deductions.
To figure out whether you owe any additional tax under the Alternative Minimum Tax system, you need to fill out Form 6251.
If the tax calculated on Form 6251 is higher than that calculated on your regular tax return, you have to pay the difference as AMT. It can result in you paying hundreds or even thousands of dollars in additional taxes.
Why are middle-class folks being hit with the AMT?
In 1987, one year after the last major overhaul of the Alternative Minimum Tax system, only one tenth of one percent of all returns had to pay the Alternative Minimum Tax.
Today, the Alternative Minimum Tax is no longer just for high-income individuals. Now, many middle-income Americans are paying the Alternative Minimum Tax or having their tax credits limited by its hidden effects.
The Treasury Department expects that more and more people will be paying the AMT over the next few years.
Read more here
Alternative Minimum Tax: Common Questions
Updated for Tax Year: 2010 The Alternative Minimum Tax (AMT) was designed to keep wealthy taxpayers from using loopholes to avoid paying taxes. But because it's not automatically updated for inflation, more middle-class taxpayers are getting hit with the AMT. Although Congress implemented a patch for 2009, it has not yet done so for 2010. These FAQs can help you decide if you are still at risk of falling under the AMT.
AMT Concerns Growing
Each year, more and more taxpayers discover, to their dismay, that they are subject to the Alternative Minimum Tax (AMT), which knocks out a lot of exemptions, deductions and credits they may have benefited from when doing their regular income taxes. Here are the answers to some common questions about the dreaded AMT, starting with information about a recent change that protects an estimated 21 million taxpayers from falling victim to the AMT when they file their 2010 returns.
How did Congress change the Alternative Minimum Tax for 2010 and 2011?
Why does the AMT exist?
What is the Alternative Minimum Tax?
Why are middle-class folks being hit with the AMT?
Why would I have to pay the AMT?
How can I avoid the AMT?
What happens to my tax credits?
How can I plan ahead for the AMT?
How did Congress change the AMT for 2010 and 2011?
As part of the 2010 Tax Relief Act, Congress revised the exemption amounts used in making AMT computations for 2010 and 2011. The AMT exemption is basically a standard deduction for taxpayers hit by the alternative minimum tax.
Without the revised exemptions, an estimated 21 million taxpayers would have fallen into the grasp of the AMT—boosting their tax bills by an average of more than $6,000 each. As a group, the taxpayers would have paid an extra $136 billion in taxes.
The patch that was approved by Congress and signed into law by President Obama, prevents that from happening.
Under the new law, the 2010 exemption amounts are:
Single taxpayers: $47,450
Married taxpayers filing jointly: $72,450
Married filing separately: $36,225
Head of Household: $47,450
For 2011, the exemption amounts are:
Single taxpayers: $48,450
Married taxpayers filing jointly: $74,450
Married filing separately: $37,225
Head of Household: $48,450
Why does the AMT exist?
In 1969, Congress noticed that 155 people with high incomes were legally using so many deductions and other tax breaks that they were paying absolutely nothing in federal income taxes. Their nonexistent tax bills were an embarrassment.
So Congress instituted the AMT with the aim of making the tax system fairer. But because the AMT was never indexed to inflation—as the regular income tax is—each year, more and more middle-income taxpayers are snared by a tax originally targeted at the rich.
The annual "patch" is Congress’s attempt to slow down the expansion of the AMT to taxpayers to whom it was never intended to apply.
What is the Alternative Minimum Tax?
The AMT is a parallel tax system that operates in the shadow of the regular tax, expanding the amount of income that is taxed by adding items that are tax-free under the regular tax system and disallowing many deductions.
To figure out whether you owe any additional tax under the Alternative Minimum Tax system, you need to fill out Form 6251.
If the tax calculated on Form 6251 is higher than that calculated on your regular tax return, you have to pay the difference as AMT. It can result in you paying hundreds or even thousands of dollars in additional taxes.
Why are middle-class folks being hit with the AMT?
In 1987, one year after the last major overhaul of the Alternative Minimum Tax system, only one tenth of one percent of all returns had to pay the Alternative Minimum Tax.
Today, the Alternative Minimum Tax is no longer just for high-income individuals. Now, many middle-income Americans are paying the Alternative Minimum Tax or having their tax credits limited by its hidden effects.
The Treasury Department expects that more and more people will be paying the AMT over the next few years.
Read more here
Alternative Minimum Tax Qestions
We have all the information regarding your question on the Alternative Minimum Tax questions.
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