Who has to pay the AMT?
There are two tax systems — the regular tax system and the Alternative Minimum Tax (AMT). You must pay whichever tax is larger. However, you have to meet the AMT thresholds before you’re subject to the AMT.
Under the AMT system, you can’t take certain adjustments and deductions. So, you could owe more under the AMT than under the regular tax system. The AMT system doesn’t have personal or dependent exemptions. Instead, there’s a single exemption amount based on filing status. The exemption phases out for higher income taxpayers. In addition, the only itemized deductions for AMT are these:
- Medical and dental expenses exceeding 7.5% of your regular tax adjusted gross income (AGI)
- Charitable contributions
- AMT investment interest to the extent of AMT investment income
- Qualified housing interest (home mortgage interest with restrictions)
- Casualty losses
- Miscellaneous deductions not subject to the 2% of AGI limitation
The IRS has an AMT assistant. This will help you determine whether you’re subject to AMT.
Related Resources
If you need to complete a W-9 tax form, you may be asking what it’s used for and why it’s needed. We explain the purpose and use of an IRS W-9 form.
The IRS thinks you may owe Alternative Minimum Tax (AMT). Learn more about IRS letter 2194 from the tax experts at H&R Block.
What do 2017 federal tax brackets and March Madness have in common? The Tax Institute Director Gil Charney weighs-in. Read more from H&R Block.
Think it's too late to make a difference on this year's tax return? Think again! Learn how to maximize tax deductions and increase your refund with H&R Block.
