Even if you’ve never paid Alternative Minimum Tax (AMT), before, you should not ignore this tax. Why? Because your tax situation might have changed and this might be the year that you need to pay AMT. AMT attempts to ensure that taxpayers who claim certain tax benefits pay a minimum amount of tax. You may have to pay this tax if your income is above a certain amount.
Here’s what you should know about the AMT:
1. When AMT applies. Your filing status and income determine the amount of your exemption. You may have to pay the AMT if your taxable income, plus certain adjustments, is more than your exemption amount. In most cases, if your income is below this amount, you will not owe AMT.
2. Exemption amounts. The 2014 AMT exemption amounts are:
• $52,800 if you are Single or Head of Household.
• $82,100 if you are Married Filing Joint or Qualifying Widow(er).
• $41,050 if you are Married Filing Separate.
Your AMT exemption is reduced if your income is more than certain limits.
3. Use the right forms. If you owe AMT, you usually must file Form 6251, Alternative Minimum Tax–Individuals. Some taxpayers who owe AMT can file Form 1040A and use the AMT Worksheet in the instructions.
4. AMT rules are complex. The easiest way to prepare and file your tax return is to use a qualified tax preparer who will figure out AMT for you if you owe the tax.
Connect with me on TaxConnections today for more information or to set up a consultation.