What Is the Federal Alternative Minimum Tax (AMT)?
The Alternative Minimum Tax is a secondary way of calculating tax debt owed to the government. The law behind the AMT requires taxpayers to calculate their personal tax debts owed using two different formulas. Taxpayers are then required to pay the higher of those two calculations. What Purpose Does the Alternative Minimum Tax Serve? This law was passed as part of the Tax Reform Act of 1969 because some of the very richest people in America were paying lower taxes than low-income tax payers. The AMT was intended to make sure no wealthy person would be able to use as many tax loopholes, exemptions and deductions in order to avoid paying as much in taxes. At the time that the law behind the AMT was passed, the law was aimed at 155 households that had eluded taxes by using tax loopholes. Alternative Minimum Tax Explained: How Could the AMT Affect You? Normally, you calculate the amount of taxes you owe to the government using a standard formula that includes certain exemptions and deducti
