Look for entries on lines 2 and 3, which adjust your taxable income for AMT purposes.Compare the Tentative Minimum Tax to your regular tax (Tentative Minimum Tax should be the line above your regular tax) to see how close you were to paying the AMT.The simplest way to see why you are paying the AMT, or how close you came to paying it, is to look at your Form 6251 from last year.
It can result in you paying hundreds or even thousands of dollars in additional taxes. If the tax calculated on Form 6251 is higher than that calculated on your regular tax return, you have to pay the difference as AMT in addition to the regularly calculated income tax.To figure out whether you owe any additional tax under the Alternative Minimum Tax system, you need to fill out Form 6251.The AMT is a parallel tax system that operates in the shadow of the regular tax system, expanding the amount of income that is taxed by adding items that are not normally taxed and disallowing many deductions under the regular tax system. The AMT exemption amounts are now indexed to rise with inflation.
But because the AMT was never indexed to inflation-as the regular income tax is-each year, more and more taxpayers that weren't originally targeted are snared by a tax originally focused on the rich. So Congress instituted the AMT with the aim of making the tax system fairer. Their nonexistent tax bills were an embarrassment.
In 1969, Congress noticed that 155 people with high incomes were legally using so many deductions and other tax breaks that they were paying absolutely nothing in federal income taxes.
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