Introduction

The AMT is a complicated tax that can have a significant impact on your personal finances. Luckily, there are ways to minimize the amount of money you owe in taxes for 2019. Here’s what you need to know about the AMT and how it works so that you can make sure your taxes are calculated correctly this year.

What is the AMT?

The Alternative Minimum Tax (AMT) is a separate tax calculation that ensures people who earn high incomes pay their fair share of taxes. It was created in 1969 to ensure wealthy individuals could not use deductions and loopholes to avoid paying any income tax at all.

The AMT works by calculating your regular income tax liability, then adding back certain deductions so you can see what your tax bill would be if you didn’t have those deductions or credits. If this amount is higher than what’s calculated by regular rules, then it becomes your AMT bill for that year–but don’t worry! You’ll only have to pay this higher amount if both:

• Your income exceeds certain thresholds ($120k for single filers; $160k for married couples filing jointly)

Who has to pay the AMT?

The AMT is a tax on high-income earners and people with large amounts of deductions. In order to determine whether you’ll owe AMT, you need to calculate your regular taxable income first. Then, add back in all your deductions except for those that are specifically excluded (such as medical expenses). If this modified amount is higher than the standard deduction for your filing status and age bracket, then you may have to pay AMT.

How do you calculate the AMT?

The AMT is a separate tax that you have to pay if your regular income tax bill is lower than it would be with the AMT. You don’t have to pay both of them at once, though–you can choose which one you want to pay.

If you’re filing as a single or head of household, your regular income tax rate depends on how much money you made during the year (your “taxable income”). For example:

• If your taxable income was less than $50,000 (single) or $75,000 (head of household), then your regular tax rate is 10%.
• If your taxable income was between $50K-$75K (single) or between $75K-$100K (head-of-household), then the first $9,525 will be taxed at 10%, but anything above that will be taxed at 12%. This means that someone who makes exactly $100K would pay 12% on everything except for their first $9,525; they’d only pay 10% on those dollars because they fall below those thresholds.

Where do you file the AMT?

The IRS requires that you file Form 6251, Alternative Minimum Tax – Individuals, if your taxable income is above a certain amount and you have to pay the AMT. The form also allows you to claim an exemption from paying AMT if your taxable income is below a certain amount.

If your taxable income exceeds $82,500 ($160,750 if married filing jointly), then you must also file Form 4626, otherwise known as “Alternative Minimum Taxable Income.” This form calculates how much of your regular tax liability was offset by various tax credits such as IRA contributions or student loan interest deductions so that only what remains needs to be paid in addition to any other taxes due for the year.

The third type of form required for AMT purposes is Form 5695, which tells taxpayers exactly how much they owe on their return before calculating additional taxes due under AMT rules (if applicable). Taxpayers must also submit Form 8801 when claiming credits related specifically to calculating alternative minimum tax liability

What are some ways to reduce your liability for the AMT?

The AMT exemption and credit are two ways to reduce your AMT liability.

• The AMT exemption is a dollar amount that can be deducted from your income to reduce the amount of taxable income subject to the regular tax. This exemption is indexed for inflation each year, so it may increase or decrease depending on changes in the CPI-U (Consumer Price Index for All Urban Consumers). Your annual AMT exemption is based on your filing status and whether you’re married, filing jointly, or single:
• Married filing jointly: $109,400 for 2018; $86,200 for 2017 and 2016; $84,500 for 2015; $82,100 for 2014; $78,750 for 2013; $74,900 for 2012; $72,600 for 2011; * Single: $70K/year from 2018 forward (up from 65K/year prior years); * Head of household: $76K/$118K if unmarried but qualifies based on dependent children living with him/her

How can you save money on taxes this year?

If you want to save money on taxes, the first thing you need to do is make sure that you’re taking advantage of all the deductions and credits available to you. There are several ways that people can reduce their tax liability by taking advantage of certain deductions and credits. The most common way is through itemized deductions, which are expenses that go directly toward reducing your taxable income (a good example would be charitable contributions). Another popular option is claiming dependents or children who qualify for a child tax credit at tax time (you’ll need some basic information about each dependent such as their Social Security number).

Another way people try to lower their tax burden is through retirement plans like 401(k)s or IRAs–these programs allow individuals who participate in them (typically employers will match employee contributions) to pay less in taxes because they aren’t receiving any income until retirement age when these funds can be withdrawn without penalty from an account holder’s paycheck before taxes are due on them

The AMT is complicated, but there are a few ways to minimize your liability.

The AMT is complicated, but there are a few ways to minimize your liability.

• Use tax software or hire an accountant. The IRS has a free online tool that you can use to calculate your AMT liability and compare it with what you would pay under the regular income tax system. If the former exceeds the latter by more than $1 million, then you’re probably subject to this tax. You can also hire a professional who specializes in taxes and get them on board with ensuring that your returns are done correctly from now on!
• Save money on taxes this year by making sure that everything is done right from now on!

Conclusion

We hope this article has helped you understand AMT and how it affects your taxes. The AMT is a complicated tax that can have a large impact on your bottom line, but there are ways to minimize its impact on your finances. If you’re still unsure about how much money you owe or how much it will cost to file an amended return with the IRS, contact us today! We’ll help answer any questions you may have so that everyone can save some money on taxes this year.