AMT and Equity Compensation
Alternative minimum tax, nonqualified stock options, incentive stock options and other forms of equity compensation.
AMT and head of household
Posted by: just_learning, February 7, 2017 10:41PM
For someone who can file as single or as head of household, is my understanding correct that "head of household" status is pretty useless when you pay AMT taxes? Or does it ever help?

I understand there are cases where HOH status is in AMT zone (regular tax is too small and so AMT kicks in), while single status ends up outside AMT zone and pays more.

But once *both* statuses are in AMT zone, is there any case when HOH status can help?

Cases I looked at had only high state and property taxes as the reasons for getting into AMT zone to begin with. Roughly 20k in taxes for ~180k in income.

Other than main exemption amount (which does not count in AMT), I think no other child related credits apply to such AGIs that they end up in AMT zone.

Re: AMT and head of household
Posted by: Art, February 8, 2017 03:58AM
I would be looking at Total Tax more than AMT.

My intuition isn't working well re: your question. Try some cases and see, but look at total tax.

Re: AMT and head of household
Posted by: just_learning, February 8, 2017 07:29PM
Yes, I am looking at the total tax and not seeing a dime in difference.

Seems like adding children and HOH status simply do not help once a single person and HOH have AMT > 0.

I am self-computing it via Excel and don't have a program to work with, so perhaps I missed something.

Re: AMT and head of household
Posted by: Kaye Thomas, February 11, 2017 09:18PM
I believe you're correct. Under AMT, HOH status is the same as single status, and having dependent children does not affect AMT liability. If your reason for paying AMT is a large itemized deduction for state and local tax, HOH probably does no good at all.

Although this isn't your situation, I'll note that HOH status may help someone paying AMT as a result of exercising an incentive stock option. The amount of AMT paid in the year the option is exercised would not change, but the amount of AMT qualifying for recovery as AMT credit in a later tax year might increase with the lower regular income tax associated with HOH status.

Kaye Thomas
Fairmark.com

Re: AMT and head of household
Posted by: just_learning, February 27, 2017 05:58PM
Thanks a lot Kaye! Appreciate both you confirming my understanding and giving an example where HOH may help.



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