AMT

See Alternative Minimum Tax.

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AMT

See alternative minimum tax.

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Alternative Minimum Tax

A tax in the United States intended to be levied on very wealthy persons who are eligible for so many deductions that they would otherwise have little or no tax liability. To arrive at the AMT, one adds certain deductions back into a person's adjusted gross income and then subtracts the AMT exemption, which results in the alternative minimum tax income. The taxpayer then pays a percentage of the alternative minimum tax income rather than his/her AGI. The AMT is controversial in the United States because it is not indexed to inflation, meaning that upper middle class families are gradually becoming subject to it, rather than only the very wealthy. See also: Tentative minimum tax, Bracket creep.

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Alternative minimum tax (AMT). The alternative minimum tax (AMT) was designed to ensure that all taxpayers pay at least the minimum federal income tax for their income level, no matter how many deductions or credits they claim.

The AMT is actually an extra tax, calculated separately and added to the amount the taxpayer owes in regular income tax. Some items that are usually tax exempt become taxable and special tax rates apply. For example, income on certain tax-free bonds is taxable.

Increasing numbers of taxpayers trigger the AMT if they deduct high state and local taxes or mortgage interest expenses, exercise a large number of stock options, or have significant tax-exempt interest.

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Alternative Minimum Tax (AMT)

A method of computing tax under which some of the income and deductions reported on the forms and schedules filed with your tax return are figured differently or disallowed. For example, interest on certain tax-exempt bonds is taxable for the alternative minimum tax, certain itemized deductions are not allowed when figuring the alternative minimum tax, and the alternative minimum tax has its own exemption amount, not based on the number of exmptions claimed on your tax return. A taxpayer pays the larger of the "regular tax" or the alternative minimum tax. The alternative minimum tax is computed on Form 6251.