Question

Who has to pay the AMT?

Answer

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 Topics

Related Resources

IRS Notice CP15B – The IRS Charged You a Penalty for Not Paying Employment Taxes

Learn more about notice CP15B, why you received it, and how to handle the notice with help from the tax experts at H&R Block.

Popular Tax Deductions, Credits & Benefits Kept With Tax Reform

Learn about the popular tax deductions and credits that remain available after the Tax Cuts and Jobs Act passed. The experts at H&R Block explain.

Don’t Pay an IRS Penalty Without Looking Into Penalty Relief

The IRS grants four types of penalty relief, but many taxpayers don't ever ask. Learn how to request penalty abatement from the IRS.

Tax Fraud

Learn more about common tax scams and get tax answers at H&R Block.