Alternative Minimum Tax (AMT) is an alternative method to calculate the minimum amount an individual owes in taxes based on their income….AMT Amount = A * (B – C) – D

1. A = 15%
2. B = The individual’s adjustable tax income.
3. C = $40,000, the AMT exemption amount.
4. D = Allowable non-refundable tax credits.

How do I calculate AMT? To calculate any AMT you might owe, use IRS Form 6251. You’ll start by taking the amount on line 11b of your 2019 Form 1040 — your taxable income calculated using the regular method — and entering it on line 1 of Form 6251.

How to Calculate Alternative Minimum Taxable Income (AMTI)?

1. Calculate your taxable income under the regular system.
2. Add deductions and breaks you have taken under the regular system.
3. Subtract the exemptions amount mentioned above according to your filing status.

AMT Household Income Phase-Out Thresholds State rates vary, but most states have 0 AMT. California for example has an AMT rate of 7%. Other stats that have AMT rates are: Iowa (7%), Minnesota (5.8%), and Colorado (3.47%).

Basically, it’s the difference between your regular tax bill, based on ordinary income tax rates, and your AMT bill, determined by completing IRS Form 6251: Alternative Minimum Tax — Individuals. When there’s a difference, you may have to pay the AMT amount in addition to your regular tax..

Automatic (default) – tells Excel to automatically recalculate all dependent formulas every time any value, formula, or name referenced in those formulas is changed. Automatic Except for Data Tables – automatically recalculate all dependent formulas except data tables.

Answer: Select the cell you will place the calculated result, enter the formula =B1*B2 (B1 is the price exclusive of tax, and B2 is the tax rate), and press the Enter key.

What are the chances the AMT will affect you?

Who Has to Pay the AMT? You only have to worry about the AMT if your adjusted gross income exceeds the exemption. If you make that much income or more, that’s the AMT taxable income. You may have to calculate your alternative minimum taxable income and pay the higher tax.

The minimum tax credit is calculated on Form 8801. calculating regular tax but not in calculating AMT). Under the AMT system, a taxpayer must determine his or her alternative minimum taxable income (AMTI) using the separate AMT rules. The calculation of the AMT begins with regular taxable income.

In simple terms, the alternative minimum tax (AMT) is an additional tax that is calculated separately from a taxpayer’s regular tax and paid in addition to the regular tax. Under the AMT system, a taxpayer must determine his or her alternative minimum taxable income (AMTI) using the separate AMT rules.

The tentative minimum tax is reduced by any AMT foreign tax credit available to the taxpayer. If the taxpayer’s tentative minimum tax (after applying the AMT foreign tax credit) exceeds his or her regular tax, the excess of the tentative minimum tax over the regular tax is the taxpayer’s AMT.

NOTE: This formula is for use only in estimating the amount of a taxpayer’s AMT liability. In order to determine the actual liability, Form 6251 must be completed. If the net alternative minimum tax is a positive amount, the taxpayer must pay this amount in addition to his or her regular tax (less applicable non-refundable credits).