123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Business >> View Article

The Alternative Minimum Tax: Will It Affect You?

Profile Picture
By Author: Leon A. Elwell
Total Articles: 64
Comment this article
Facebook ShareTwitter ShareGoogle+ ShareTwitter Share

In your tax planning, don’t overlook how your tax-saving strategies might be impacted by the alternative minimum tax.

What is the alternative minimum tax?

Enacted back in 1969, the alternative minimum tax (AMT) is a separate income tax calculation that was designed to make sure that high-income taxpayers pay a minimum amount of taxes, even if they have sufficient deductions and credits to reduce their federal income tax liability to zero.

To calculate the AMT, start with regular taxable income, which includes all your familiar deductions and exemptions. Then make adjustments and add back certain “preferences” to arrive at your AMT income. Preferences include personal exemptions, state and local taxes, certain interest on home-equity loans, and miscellaneous itemized deductions.

After adding back the preferences, you’re entitled to an exemption amount, though the exemption phases out at higher-income levels.

You then calculate your AMT by applying tax rates of either 26 percent or 28% depending on your AMT taxable income. The income thresholds for these rates change each year. Finally, ...
... you compare your AMT to your regular tax and pay whichever is greater.

Who is impacted by the AMT? Congress created the AMT to ensure that wealthier taxpayers, who often have the kinds of income and deductions that qualify for preferential tax treatment, would pay at least a minimum amount of tax. Congress also wrote exemptions into the law, so that middle-income taxpayers wouldn’t be subject to the AMT. Today the AMT impacts a much broader cross-section of taxpayers.

Will the AMT impact you?

You need to consider the AMT if you have a lot of dependents or if you claim substantial itemized deductions. You may also be subject to the AMT if you realize hefty capital gains during the year or exercise incentive stock options. Claiming certain tax credits might trigger the AMT as well. And if you are an owner of rental real estate or a capital intensive business, you need to be aware that the amount of depreciation allowed under the AMT is limited.

Don’t let the AMT cause your tax planning strategies to backfire. To find out whether you might be affected by the AMT, contact our team today: https://www.bas-pc.com/appointment-center/

More About the Author

Business Accounting Systems, P.C., is a South Jersey Public Accounting Firm located in West Deptford, New Jersey that has been providing excellence in servicing the accounting, payroll, and tax needs of independently owned small businesses throughout the Tri-State area. For More Info : Visit Here : https://www.bas-pc.com/

Total Views: 206Word Count: 354See All articles From Author

Add Comment

Business Articles

1. Connect Your Clients In A Better Way With Digital Business Cards
Author: Angus Carruthers

2. Design Interiors Elevates Kitchen Living In Brighton With Bespoke, Functional Designs
Author: Kitchen Brighton

3. Make Your Small Business Run Smoothly With Telephone Answering Services
Author: Eliza Garran

4. Finding The Best Business Broadband Providers With These Tips
Author: Julian Serle

5. 3 Major Benefits Of Partnering With A Hosted Voip Service Provider
Author: Julian Serle

6. Understanding E-commerce Content Compliance: A Seller’s Guide
Author: Actowiz Metrics

7. Lucintel Forecasts The Cloud Orchestration Market In Germany To Reach $59 Billion By 2031
Author: Lucintel LLC

8. Lucintel Forecasts The Circuit Breaker Tester Market In United States To Reach $2 Billion By 2031
Author: Lucintel LLC

9. Leed, Estidama & Beyond: What A Green Building Consultant In Dubai Can Do For You
Author: GREEN BUILDING

10. Lucintel Forecasts The Circuit Breaker Tester Market In Japan To Reach $2 Billion By 2031
Author: Lucintel LLC

11. Mwhat To Look For In An Expense Management Software
Author: TrackHr App

12. Industrial Cleaning Contractors Limited Delivers Expert Industrial Painting And Dilapidations Services Across The Uk
Author: Expert Support

13. Lucintel Forecasts The Circuit Breaker Tester Market In Germany To Reach $2 Billion By 2031
Author: Lucintel LLC

14. How Proposal Writing Company Can Be Contributing In The Growth Of Your Business
Author: Mark Twain

15. Professional Proposal Writing Services And Succeed In Business, Here Is How!
Author: Mark Twain

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: