Question

"Compute the 2019 AMT exemption for the following taxpayers.

a.Bristol, who is single, reports AMTI of $650,000.

b.Marley and Naila are married and file a joint tax return. Their AMTI is $1,528,000"

I do not understand AMT. So please over explain.

Answer 1

Solution

Alternate Minimum Tax AMT is a tax system to collect a minimum amount of income tax for each year from the taxpayers who generated the income more than modest economic income. The AMT uses economic as the tax base rather than the regular income tax base.

a. Answer -

Bristol is single.

Bristol AMTI = $650,000

So,

Bristol AMT exemption = $71700 (as per chart)

Status	Exemption	Phaseout
Begins at	Ends at
Single	$71700	$510300	$797100

b. Answer -

Marley and Naila are married and file a joint tax return.

Marley and Naila AMTI = $15,28,000

So,

Marley and Naila AMT exemption = $0 (as per chart) because the exemption is upto income $14,67,400

Status	Exemption	Phaseout
Begins at	Ends at
Married, joint	$111700	$1020600	$1467400

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