How to Calculate Your Alternative Minimum Tax
- 1). Report either your adjusted gross income or your income after your itemized deductions on line 1 of form 6251. You should use your adjusted gross income, which can be found on line 38 of your form 1040 tax return, if you claim the standard deduction. You should use your income after your itemized deductions, found on line 41 of your form 1040 tax return, if you itemize your deductions.
- 2). Enter the disallowed deductions and credits that you claimed on lines 2 through 28. Common deductions that are disallowed or reduced include the mortgage interest deductions, medical expenses, state, local and foreign taxes and any miscellaneous deductions.
- 3). Add the value of the disallowed and reduced deductions from lines 2 through 28 to your taxable income from line 1 to find the amount of income you have that is subject to the alternative minimum tax. Report this total on line 29 of form 6251.
- 4). Determine the amount of your AMT exemption for your filing status and income using either the table on form 6251 or the worksheet in the form 6251 instructions and report the value on line 30.
- 5). Subtract the value of your exemption from your total income subject to the AMT and report the result on line 31. If the result is $0 or less, you do not owe any AMT.
- 6). Calculate your tax liability under the AMT rules by multiplying your income by AMT tax rates. As of 2010, the rate is 26 percent on the first $175,000 of income subject to the AMT and 28 percent on income subject to the AMT over $175,000. If you are married but file a separate return, the rate is 26 percent on the first $87,500 and 28 percent on any income over $87,500.
- 7). Subtract your regularly calculated tax liability from your AMT tax liability. If the result is greater than $0, that is the amount of AMT that you owe. For example, if you would owe $67,000 in taxes under the normal tax calculations but would owe $90,000 under AMT calculations, you would subtract $67,000 from $90,000 to find that your AMT would be $23,000.
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