What is alternative minimum tax?
The alternative minimum tax (AMT) is used so that taxpayers with a large amount of income pay a minimum amount of taxes. This is done by adding back previously deducted tax-preference deductions and adjustments.
Alternative minimum tax is considered the excess of tentative AMT over regular tax.
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You might also be interested in... How to calculate AMTI from regular taxable income?
To calculate alternative minimum taxable income (“AMTI”), there are certain adjustments and preferences need to be applied to regular taxable income. The most common types of adjustments and preferences to ATMI are laid out in the visual below:
What are preferences that are added to ATMI?
According to the IRS, “preference” items are always added back when calculating AMTI. Preference items for AMT purposes consist of:
What are common adjustments to ATMI?
According to IRS literature, adjustments are defined as specific items that may either increase or decrease taxable income. Adjustments are referred to as timing differences that can either increase or decrease alternative minimum taxable income (AMTI). Examples of adjustments include:
How to calculate AMTI from regular taxable income?
To calculate alternative minimum taxable income (“AMTI”), there are certain adjustments and preferences need to be applied to regular taxable income. The most common types of adjustments and preferences to ATMI are laid out in the visual below:
What are preferences that are added to ATMI?
According to the IRS, “preference” items are always added back when calculating AMTI. Preference items for AMT purposes consist of:
What are common adjustments to ATMI?
According to IRS literature, adjustments are defined as specific items that may either increase or decrease taxable income. Adjustments are referred to as timing differences that can either increase or decrease alternative minimum taxable income (AMTI). Examples of adjustments include:
