It’s tax time again, and as you are filling out the forms, don’t be surprised if your taxes aren’t as straightforward as they should be. Depending on your income, you may have to pay what is known as the “Alternative Minimum Tax” or AMT. The AMT is an income tax imposed at nearly a flat rate on an adjusted amount of taxable income above a certain threshold. Generally, people in the higher income brackets are subject to the AMT.
Here are a few of the things the IRS wants you to know about the AMT:
Know when the AMT applies. You may have to pay the AMT if your taxable income, plus certain adjustments, is more than your AMT exemption amount. Your filing status and income define the amount of your exemption. In most cases, if your income is below this amount, you will not owe the AMT.
Know exemption amounts. The 2015 AMT exemption amounts are:
- $53,600 if you are Single or Head of Household.
- $83,400 if you are Married Filing Jointly or Qualifying Widow(er).
- $41,700 if you are Married Filing Separately.
Use the right forms. Usually, if you owe the AMT, you must file Form 6251, Alternative Minimum Tax – Individuals. Some taxpayers who owe the AMT can file Form 1040A and use the AMT Worksheet in the instructions.
As always, if you have any questions, consult with a professional.