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What is Alternative Minimum Tax (AMT)?
Personal Finance About Tax
The #1 rule related to tax is that you need to pay tax, but you do not need to pay more than you should. So how do you know how much you need to pay? The best way is to learn tax rules or ask for accounting professional for help.
I know it is not accessible under all the tax rules. The good news is that you do not need to know every one of them just enough for your situation. Today, I want to show you what is AMT (Alternative Minimum Tax). You may not have ever heard about it before.
AMT is a tax rue for people whose income level is higher than a certain amount. “The AMT applies to taxpayers with certain types of income that receive favorable treatment or who qualify for certain deductions under the tax law(IRS).
In 2022, AMT’s exemption amount is $73,600 for single, $114,600 for married filing jointly or qualifying widow(er), and $57,300 for married filing separately. The tax bracket for AMT is 26% for the first $199,9900 or 28% instead of 10% to 37% in standard federal tax brackets.
So what this means to you? AMT will apply to people who earn a higher income than more than the AMT exemption amount and want to take more deductions rather than the standard deduction of $12,950. Deductions include but are not limited to donations, electric car credit…
