How Do You Calculate IRS Alternative Minimum Tax?
The Internal Revenue Service allows a wide range of tax deductions and credits that help people reduce their tax liability. However, the IRS also imposes an alternative minimum tax, also known as the AMT, which disallows many of these deductions to prevent people with significant incomes from paying almost nothing through carefully calculated tax deductions. To calculate your AMT, you need to recalculate your taxable income. Recalculate your taxable income by completing part I of form 6251. When calculating the alternative minimum tax, the IRS disallows or reduces a number of deductions so your taxable income increases. Determine your exemption amount by using line 30. If your taxable income exceeds the amounts listed on form 6251, you must use the exemption worksheet in the form 6251 instructions on page 8 to determine how much of your income is exempt from the alternative minimum tax. Subtract the value of your exemption from step 2 of your recalculated taxable income from step 1 to
