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ARTICLE · 07 OCTOBER 2015

Are You At Risk For AMT Liability?

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Do you know if you are likely to be subject to the alternative minimum tax (AMT) — and what actions can trigger it? If not, you need to find out so that you can consider taking steps to address potential AMT liability.

United StatesWealth Management
Dan Newman
Dan Newman
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Do you know if you are likely to be subject to the alternative minimum tax (AMT) — and what actions can trigger it? If not, you need to find out so that you can consider taking steps to address potential AMT liability.

AMT Defined

The AMT was established to ensure that high-net-worth individuals pay at least a minimum tax, even if they have many deductions that reduce their "regular" income tax. If your AMT liability is greater than your regular income tax liability, you must pay the difference as AMT, in addition to the regular tax.

AMT rates begin at 26% and rise to 28% at higher income levels. The maximum rate is lower than the maximum income tax rate of 39.6%, but far fewer deductions are allowed, so the AMT could end up taking a bigger tax bite.

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