Alternative Minimum Tax
Taxpayers must pay the higher of the regular income tax or the Alternative Minimum Tax (AMT). Taxpayers who have paid AMT in prior years may claim a credit against regular tax for the prior AMT. The credit is limited so that regular tax is not reduced below current year AMT.
AMT is imposed at a nearly flat rate (20% for corporations, 26% or 28% for individuals, estates, and trusts) on taxable income as modified for AMT. Key differences between regular taxable income and AMT taxable income include:
- The standard deduction and personal exemptions are replaced by a single deduction, which is phased out at higher income levels,
- No deduction is allowed individuals for state taxes,
- Most miscellaneous itemized deductions are not allowed for individuals,
- Depreciation deductions are computed differently, and
- Corporations must make a complex adjustment to more closely reflect economic income.
Read more about this topic: Income Tax In The United States
Famous quotes containing the words alternative, minimum and/or tax:
“A mental disease has swept the planet: banalization.... Presented with the alternative of love or a garbage disposal unit, young people of all countries have chosen the garbage disposal unit.”
—Ivan Chtcheglov (b. 1934)
“After decades of unappreciated drudgery, American women just don’t do housework any more—that is, beyond the minimum that is required in order to clear a path from the bedroom to the front door so they can get off to work in the mourning.”
—Barbara Ehrenreich (20th century)
“What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin.”
—Mark Twain [Samuel Langhorne Clemens] (1835–1910)