What is the Alternative Minimum Tax?

There are actually TWO distinct Federal tax systems in operating, the regular tax (as calculated on the series 1040 forms and applicable to most people) and the alternative minimum tax (AMT). The latter applies generally to those whose deductions or tax- favored income include "tax preferences" which need to be added back in determining the calculation of the AMT, which is done on Form 6251.

Tax preference additions include your personal exemptions, standard deduction (or itemized deductions related to interest, taxes and the deductible portion of your "miscellaneous" or medical expenses), accelerated depreciation over straight line, tax exempt interest on private activity bonds, and certain deductions related to oil and gas investments. If your taxable income, with these items added back, exceeds $45,000 joint, $33,750 unmarried or $22,500 married/separately, you may be subject to this tax, and should complete Form 6251.

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