Definition:
Alternative Minimum Taxable Income (AMTI) is the amount of income used to calculate the alternative minimum tax (AMT) liability. It is calculated by starting with adjusted gross income (AGI) and making certain adjustments, such as adding back certain deductions and credits that are allowed for regular income tax purposes but not for AMT purposes.
Key points about AMTI:
- Preference items: AMTI includes a list of preference items, which are items that are deductible for regular income tax purposes but not for AMT purposes. These items include certain tax-exempt interest, certain deductions for personal exemptions, and certain depreciation deductions.
- Exemptions: There are exemptions available for AMTI, which can reduce the amount of tax owed.
- Tax rates: The AMT tax rates are higher than regular income tax rates.
Why is AMTI important?
- AMT liability: AMTI is used to calculate the amount of AMT that a taxpayer owes.
- Tax planning: Understanding AMTI is important for effective tax planning, as it can affect the overall tax liability of high-income taxpayers.
It’s important to note that AMTI can be complex and can have a significant impact on a taxpayer’s tax liability. If you are a high-income taxpayer, it’s recommended to consult with a tax professional to determine your AMTI and the amount of AMT you may owe.
