Question

For 2017, Marian Nowacki, who is unmarried, had a taxable income of $140,000. Her regular tax is $32,181.75, her alternative minimum taxable income is $185,300 (including $20,000 of qualified dividends and long term capital gains, none of which is collectibles gain, taxed at $3,000), and her exemption amount (after the phase out) is $38,150. She has no regular or alternative minimum tax foreign tax credit. Does she owe any alternative minimum tax? If so, how much?

Answer 1

Yes. She is obliged to pay Alternate Minimum Tax (AMT).

Here are the Alternate minimum tax rates;

Filing Status	26% AMT Tax Rate	28% AMT Tax Rate
Married filing separately	AMTI up to $95,750	AMTI above $95,750
All other filers	AMTI up to $191,500	AMTI above $191,500

Thus Marian Nowacki being unmarried and AMT Income is less than $191500, applicable rate would be 26%.

Thus AMT is calculated hereunder:

Alternative minimum taxable income = $185,300

Less: Exemption amount = $38,150

Final AMT Taxable amount = $147,150

Applicable Rate =26%

Therefore,

AMT= $147,150 x 26% = $38259

Regular Tax = $32,181.75 (Given in the illustration)

Since AMT is higher than regular tax, Marian Nowacki has to pay AMT i.e.$38259

Note: No deductions are being allowed for qualified dividends and long term capital gains.