Alternative Minimum Tax
The Alternative Minimum Tax (AMT) is a separate tax assessed on certain types of income and deductions. It is "an extra tax some people have to pay on top of the regular income tax."1
Essentially, the AMT system uses an alternative set of rules to creates a taxable income figure. If your regular income tax figure is lower, AMT can be levied and the taxpayer will have to make up the difference. In this sense, it is not an "alternative" for the tax payer, it just uses different rules to calculate taxable income.1
Fast Facts
- Established: 1969
- Both an Individual and a Corporate AMT
- Affected 30% of Taxpayers earning between 75,000 and 100,000 in 2006, as well as higher income individuals
- Stock Option Income, Mortgage Interest Deductions, and Capital Gains are a few of the factors that can expose you to the AMT
Disclaimer
The information on this page is not a substitute for professional tax advice.
Related Pages on Mahalo
Tax Reform | Tax Shelter
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