AMT and Equity Compensation
Alternative minimum tax, nonqualified stock options, incentive stock options and other forms of equity compensation.
AMT question
Posted by: gejo48, December 28, 2014 05:26AM
I have read fairmark's AMT reference pages but am still unclear on how this works. There are figures posted for when the AMT might become a problem for someone.

For example, for 2014, the AMT for mfj kicks in at $82,100. Does this mean that if your AGI is at least $82,100 you are subject to the AMT?

Or do we first subtract our 2 personal exemptions and our standard deduction from AGI to come up with our taxable income before worrying about the AMT? In other words, does the AMT kick in for mfj only when your TAXABLE income goes over $82,100?

Re: AMT question
Posted by: triad, December 28, 2014 07:38PM
No, that's not how works.

Technically, you calculate your income tax twice, once on the 1040 form and once on the 6251. Whichever tax bill is higher is the one you owe.

On the 1040, you can subtract $3950 per exemption. On the 6251, you don't. On the 6251, you do not get a standard deduction and not everthing that you itemize is allowed.

Look at your AGI. Is that higher than $82100? Do you have anything that has to be added back for AMT (such as Private Activing Bond interest)?

Re: AMT question
Posted by: gejo48, December 28, 2014 08:38PM
I am unfamiliar with the 6251 and we don't itemize.

1) If for example, our income was $82,500 and in addition we were to take an (inherited) IRA distribution of $10k, we would have an AGI of $92,500.

Because we don't itemize, we would subtract $12,400 for the mfj standard deduction and also we would subtract another $7,900 for our personal exemptions, leaving us with a taxable income of $72,200.

Would we be required to pay regular taxes or the AMT?
What would we pay in this example?

2) Also, we've seen the term AMT credit. What is that?

Thank you for the help.

Re: AMT question
Posted by: wpatch, December 29, 2014 02:11AM
1.Regular tax Taxable income * regular rate = $72,200 * .15 = $10,830
Minimum alternative tax = (AGI +AMT adjustments- AMT deduction) * AMT rate = ($92,500 - 82,100) * .26
= $2704
Since regular tax is larger Pay regular tax
AMT is the excess of minimum alternative tax computation over the regular tax is zero.

2. If you have AMT that is triggered by a timing issue such as the vesting of ISOs or differences between accelerated regular depreciation and a slower AMT depreciation use Form 8801 after the first year paying to determine whether and how much of AMT credit you may recover.

Edited: Form 8801it is. ty Art!

Re: AMT question
Posted by: Art, December 29, 2014 04:19PM
Form 8801

instuctions: []

Re: AMT question
Posted by: kulzerdipadova, July 31, 2015 07:04PM
I too have same question but the amount is different..

Thanks for sharing...

Sorry, only registered users may post in this forum.