|Certified Public Accountant
ALTERNATIVE MINIMUM TAX (ALT)
Most Americans don't know that there is a second tax
calculation called alternative minimum taxes (Form 6251)
computation. This tax calculation can cause higher taxes
than regular income taxes. The alternative minimum tax
was originally established to force certain taxpayers to pay
some tax and not to avoid taxes entirely because of certain
special deductions or exclusions.
Now it is becoming a major source of taxes for the US
treasury and many average Americans are paying this
extra tax for the following reasons:
1. Regular tax rates are lower but amt rates are not lower.
2. Local taxes (property, sales and state income)
are increasing and are not deductible for amt.
3. Miscellaneous itemized deductions are not
deductible for amt.
4. Other amt preference items are added back to
regular tax income.