AMT stands for alternative minimum tax. It is an alternative way to calculate your federal income tax liability. This method must be used if it results in your owing a larger amount in taxes at the end of the year. The AMT calculations differ from the normal income tax calculation. Certain deductions and credits are minimized or eliminated and instead replaced by an AMT deduction, and different tax brackets are used. To calculate your taxes using the AMT, you must complete form 6251.
Enter you base taxable income for the alternative minimum tax on line 1 of form 6251. If you claimed the standard deduction, your base taxable income is your adjusted gross income from line 38 of your form 1040 tax return. If you itemized your deductions, use your net taxable income after your itemized deductions have been taken out, which is the amount on line 41 or your 1040.
Fill in the appropriate amount for each disallowed or decreased deduction on lines 2 through 28 on your form 1040 tax return. For example, if you claimed deductible taxes on your Schedule A (itemized deductions), you would write that amount on line 3.
Add the total from lines 1 through 28 of form 6251 to calculate the alternative minimum taxable income and write this amount on line 29 of form 6251.
Write the appropriate amount of your AMT tax deduction on line 30 based on your filing status and alternative minimum taxable income, found on form 6251. For example, for the 2009 tax year, if you are single and have an income of $100,000, you would enter $46,700.
Subtract the value of your AMT deduction from your alternative minimum taxable income and write the result on line 31. For example, if your alternative minimum taxable income was $100,000 and your exemption was $46,700, you would write $53,300.
Calculate your alternative minimum tax by multiplying your income by the appropriate tax rate. For 2009 tax returns, if your income subject to the AMT is less than $175,000 ($87,500 if you are married but file a separate return), you would multiply it by 0.26. If greater than $175,000, multiply it by 0.28 and subtract $3,000 ($1,750 if married but filing separate returns) from the result and write the result on line 32.
Write the value of the alternative minimum tax foreign tax credit (if eligible) on line 33. Then subtract the value from your alternative minimum tax from line 32 and write the result on line 34.
Subtract the amount of tax you owe under the normal income tax calculations from the amount of your alternative minimum tax. If the result is less than $0, write $0 because you are not subject to the AMT. However, if your AMT is greater, write the difference on line 36 and copy that amount to line 45 of your form 1040 tax return. For example, if you would owe $55,000 under the AMT and only $49,000 under normal income tax calculations, you would owe an additional $6,000 from the AMT.
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