a federal tax designed to assure that a person cannot avoid paying income tax through the use of various tax shelters. The alternative minimum tax applies when the calculated amount is higher than the regular tax otherwise payable.
A federal income tax applied to individuals and corporations that take advantage of tax benefits in amounts that are large relative to their incomes. Investors subject to AMT lose the benefits of the tax exemption for interest paid on otherwise tax-exempt securities.
For income tax purposes, this is a tax created to ensure that high-income individuals, corporations, trusts and estates pay at least some minimum income tax regardless of deductions, credits or exemptions. (See your tax advisor for more information).
An IRS mechanism created to ensure that high-income individuals, corporations, trusts, and estates pay at least some minimum amount of tax, regardless of deductions, credits or exemptions. It operates by adding certain tax-preference items back into adjusted gross income.
A separate tax system designed to assure that wealthy individuals and organizations pay at least a minimum amount of federal income taxes. Certain securities used to fund private, for-profit activities are subject to the AMT.
A federal tax paid by those who qualify for certain types of deductions and credits, which might otherwise reduce their tax liability to little or nothing.
An income tax system designed in 1969 to ensure that wealthy individuals and corporations pay at least some tax regardless of their deductions. Taxpayers compare their regular tax results to a flat rate and pay whatever amount is higher. Because the program was never indexed to inflation, the tax applies to an ever-increasing number of people.
A method of calculating income tax that disallows certain tax preferences. The tax is intended to ensure that taxpayers who benefit from tax preferences do not escape all income tax liability. Taxes must be calculated using both the ordinary and alternative methods, and the greater of the two results must be paid.
a federal tax on so-called tax preference items that may be imposed on individual taxpayers and corporations when such tax is greater than the regularly calculated federal income tax
An alternate method of calculating income under the Internal Revenue Code. Interest earned on certain private activity bonds issued after August 7, 1986 is used in determining a bondholders tax liabilities.
Provisions in the tax law intended to prevent taxpayers from paying too little income tax. The AMT kicks in once a taxpayer has too many of certain deductions or other tax benefits, and varies depending on the taxpayer’s income level.
A penalty tax in which a taxpayer must pay the higher of its regular tax or AMT liability. AMT is partially based on a company taking too many depreciation deductions.
A tax that may be triggered if certain tax benefits, such as passive losses and accelerated depreciation, reduce an individual's income tax liability. You must use Federal tax form 6251 to determine if you are subject to the Alternative Minimum Tax.
The tax law gives preferential treatment to some kinds of income and allows special deductions and credits for some kinds of expenses. People who benefit from these may have to pay an additional tax called the alternative minimum tax. It is a separate tax computation that, in effect, eliminates many deductions and credits and creates a tax liability for someone who would otherwise pay little or no tax. Before mailing their federal income tax return, all taxpayers are required to compute their tax liability twice, first using the standard method AND then using the AMT method. A taxpayer's actual tax liability will be the higher of the two results. In recent years, more and more people have found themselves subject to the AMT.
An alternative tax to the regular income tax designed to ensure that individuals pay at least a minimum tax.
An alternative tax computation that adds certain tax preference items back into adjusted gross income. If the AMT is higher than the regular tax liability for the year, the regular tax and the amount by which the AMT exceeds the regular tax are paid. It is intended to ensure that high-income individuals, corporations, trusts and estates pay at least some minimum amount of tax, regardless of deductions, credits or exemptions.
Source: Economics: Principles & Practices Definition: personal income tax rate that applies to cases where taxes would otherwise fall below a certain level (p.245)
Federal or state tax rules that aim to have taxpayers compute their taxes both through traditional means as well as an alternate set of rules. If the AMT rules produce a tax liability greater than that from traditional means, the taxpayer generally must pay the higher AMT required tax. The IRS instituted these rules to ensure some taxpayers with certain situations pay at least some tax. Some portion of tax-exempt fund dividends may be derived from private activity bonds, which are a tax-preference item for the AMT.
A second federal income tax system parallel to the regular income tax system. Congress enacted the AMT to ensure that every individual and corporation pays at least a minimum tax every year.
A new tax method, introduced in the Tax Reform Act of 1986, that makes it more difficult for both corporate and non-corporate taxpayers to avoid tax through the use of certain tax benefits known as "tax preference items."
A federal tax designed to ensure that high-income individuals pay a fair amount of income tax.
Alternative Minimum Tax is a calculation designed to ensure that individuals and corporations pay their "fair share" of federal income taxes. Interest on private activity municipal bonds is subject to AMT.
A federal tax applicable to both individuals and corporations. The tax reaches so-called "preference items": items of income treated favorably by the regular income tax, but subject to abuse when accumulated in large amounts by taxpayers.
A mechanism the IRS created to ensure that high-income individuals, corporations, trusts, and estates pay at least some minimum amount of tax, regardless of deductions, credits or exemptions.
A minimum tax imposed on taxpayers who itemize deductions, such as interest, medical expenses, state taxes, miscellaneous deductions and passive activity losses, or who earn certain types of income. These deductions are added back into your income and the result is taxed at a flat rate of either 26% or 28%. You would pay the higher of either your regular tax or this alternative minimum tax. If you think you may be subject to AMT, you should consult your tax advisor.
Alternative minimum tax (AMT) rules ensure that at least a minimum amount of tax is paid by all individuals. For 2001, there is a two-tiered minimum tax: a 26% rate on the first $175,000 of a tax payer's AMT income and a 28% AMT rate in excess of $175,000.
In addition to calculating regular income tax, taxpayers are also required to calculate tax liability using the AMT method. The taxpayer then pays the higher of the tax calculated by the two methods. Some municipal bonds are subject to AMT, meaning that if you pay AMT, the interest earned on these bonds is taxable under the AMT calculation. Other municipal bonds are not subject to AMT, meaning that even if you pay taxes using the AMT method, interest from non-AMT municipals will not be taxable. Please consult your tax advisor for complete details, and how you might be affected by buying municipal bonds that are subject to AMT.
Taxpayers who are paying less than the minimum tax rate under the regular tax system may be liable for additional tax under the alternative minimum tax laws. Alternative minimum taxable income is computed from regular taxable income with certain adjustments and the addition of all appropriate tax preference items. Refer to the AMT for Individuals IRS Form 6251 (pdf, 28 kb) and its instructions (pdf, 60 kb).
The alternative minimum tax is an additional tax that applies to individuals, trusts and estates with certain tax preference items.
A method of calculating income tax that does not allow certain deductions, credits, and exclusions. The Alternative Minimum tax was devised to ensure that individuals, trusts, and estates that benefit from tax preferences do not avoid paying any federal income taxes.
This term is used to refer to the federal income tax liability of insurers, without regard to whether the insurer has taxable income using standard calculations.
Tax imposed to back up the regular income tax imposed on a corporation and individuals to assure that taxpayers with economically measured income exceeding certain thresholds pay at least some income tax.
A federal tax aimed at guaranteeing that individuals, trusts, estates, and corporations pay a minimum amount of income tax, preventing them from taking full advantage of exemptions and other tax benefits that would otherwise allow them to pay little or no income tax.
An alternative, separate tax calculation based on the taxpayer's regular taxable income, increased by the taxpayer's preferences for the year. The resulting amount is called the alternative minimum taxable income (AMTI). After certain exemptions and offsets, the taxpayer determines its AMT and is required to pay the larger of the regular tax or alternative minimum tax. Among the preferences that can increase the taxpayer's AMTI is the accelerated portion of depreciation, thereby making it more likely that a taxpayer who buys equipment may be subject to the AMT rather than to regular tax.
An additional tax that you may have to pay if you benefit from tax laws that give special treatment to some kinds of income and allow special deductions and credits for some kinds of expenses. AMT ensures that you pay at least a minimum amount of tax.
The alternative minimum tax is designed to prevent taxpayers from escaping a fair share of tax liability by use of certain tax breaks. A taxpayer is subject to this tax if he or she has certain minimum tax adjustments or tax preference items and his or her alternative minimum taxable income exceeds the exemption allowed for his or her filing status and income level. The alternative minimum tax is computed on Form 6251.
A tax aimed at preventing affluent investors from using tax shelters to evade other types of taxes such as income tax. Computation of the AMT takes into consideration tax preference items.
Regulations designed by Revenue Canada to limit the tax advantage that an individual can obtain certain tax incentives. For example annual RRSP contributions, capital gains and tax-shelter investments.
A federal tax meant to ensure that wealthy individuals, estates, trusts, and corporations pay a sufficient amount of income tax.
A tax designed to collect at least a minimum amount of tax from taxpayers who benefit from the tax laws that give special treatment to certain kinds of income and allow deductions and credits for certain kinds of expenses.
A federal income tax calculated on specific tax benefits or preferences, such as interest income received from certain municipal bonds. To ensure that individuals taking advantage of such benefits pay at least a minimum amount of tax, the AMT applies whenever it is greater than a person's taxes calculated without these benefits.
A method of calculating income tax that disallows certain deductions, credits, and exclusions. This was intended to ensure that individuals, trusts, and estates that benefit from tax preferences do not escape all federal income tax liability. People must calculate their taxes both ways and pay the greater of the two.
A separate tax calculation in which a taxpayer must pay the higher of its regular tax or AMT liability. The corporate AMT rate, although lower than the regular tax rate, is applied to a different, typically higher, taxable income than for regular taxes. This form of tax makes it more difficult to avoid paying "fair share" of tax through the use of certain regular tax benefits, which are known as "tax preference items" or "adjustment items".
An alternative, separate tax calculation based on the taxpayer's regular taxable income, increased by the taxpayer's preference for the year. The resulting amount is called the alternative maximum taxable income (AMT). After certain exemptions and offsets, the taxpayer determines his/her AMT and is required to pay the larger of the regular tax or alternative minimum tax. Among the preferences which can increase the taxpayer's AMT is the accelerated portion of depreciation, thereby making it more likely for a taxpayer that buys equipment to be subject to the AMT rather than regular tax.
Federal tax, revamped by the Tax Reform Act of 1986, aimed at ensuring that wealthy individuals, trusts, estates and corporations pay at least some tax.
A different method of calculating an individual's tax liability. The interest income from some municipal bonds may be subject to the alternative minimum tax.
The excess, if any, of a taxpayer's tentative minimum tax for a tax year over his or her regular tax for the tax year. The Internal Revenue Code (Code) defines tentative minimum tax for various categories of taxpayers.
A tax designed to prevent wealthy investors from using tax shelters to avoid other (income) taxes. The calculation of the AMT takes into account tax preference items. See: Tax Preference Items.
A federal income tax that prevents high-income taxpayers from avoiding taxes by using exclusions, deductions and credits.
An alternative method of computing your tax liability separate from the regular federal income tax. The AMT was designed to ensure that taxpayers pay a minimum amount of tax on their economic income. This tax may apply to taxpayers who receive certain benefits for regular tax purposes (for example, the exemption from regular tax on interest from municipal private activity bonds) or who have substantial itemized deductions and/or credits. Please consult your tax advisor to determine if the AMT applies to your tax situation.
An alternative tax system that says: your tax shall not go below this level. The alternative minimum tax works by negating (or minimizing) the effects of tax preferences or loopholes.
this is a complex tax calculation, which primarily affects affluent taxpayers.
A specially calculated tax that helps ensure preference items such as accelerated depreciation do not keep taxpayers from paying their fair share of taxes.
AMT is a federal tax system designed to ensure taxpayers pay their fair share of tax liability. In short, this system was implemented to prevent higher-income individuals from claiming too many deductions and paying too little in taxes.
The Tax Reform Act of 1986 substantially modified the Alternative Minimum Tax, which must be calculated for all taxpayers. The AMT is a penalty tax of sorts, as a taxpayer must pay the higher of its regular tax or AMT liability. The corporate AMT rate will be applied to a different, typically higher, taxable income than for regular taxes. This is why the AMT liability may be higher.
(or AMT) A federal tax aimed at ensuring that wealthy individuals, trusts, estates and corporations pay at least some income tax.
A tax-law provision that ensures that individuals and companies pay some income tax, no matter how many deductions or credits they claim. Under the AMT, certain money not usually considered taxable â€” such as municipal bond interest â€” is treated as taxable. People with income over $75,000 and many tax deductions often fall under this provision. Most vulnerable are taxpayers with several children, interest deductions from second mortgages, high state and local taxes and incentive stock options.
A federal tax aimed at wealthy tax payers so that they are forced to pay at least a minimum level of income tax.
Source: Congressional Budget Office Definition: A tax intended to prevent higher-income taxpayers from excessively reducing their tax liability (the amount they owe) through the use of preferences in the tax code. Taxpayers subject to the AMT are required to recalculate their tax liability on the basis of a more limited set of exemptions, deductions, and tax credits than would normally apply.
This tax primarily affects high-income taxpayers who shelter some of their income from taxation through certain tax preference items or deductions. It is often referred to as AMT. If your income meets the limit, then you have to recalculate your tax amount that is due based on the separate alternative minimum tax rates and tables.
A tax of 24 percent on the appreciation of capital gain property donated to a charitable organization.
A federal tax applied to regular business income with adjustments made for tax preference items.
(AMT) – A method of determining taxable income and the amount of tax due for high income taxpayers and corporations that uses rules significantly different from the rules used in the “normal” method of taxation. The initial purpose of this alternative tax scheme was to reduce the opportunities for total tax avoidance with various tax deductions and credits.
A special tax designed primarily to prevent the wealthy from using so many tax breaks that their regular tax bill is reduced to little or nothing. In recent years, it has affected more and more taxpayers who exercised incentive stock options at work and will increasingly affect taxpayers who do not consider themselves rich. The AMT ignores certain tax benefits allowed by the regular rules and applies special rates - 26% and 28% - to a larger amount of income than is taxed by the regular tax.
A required tax calculation which ensures that high income earners will be required to pay.
The Alternative Minimum Tax (AMT) system is part of the federal income tax system in the United States. There are two AMTs, one for individuals and the other for corporations. The AMT for individuals is addressed here.