Definition:
AMT adjustments are adjustments made to adjusted gross income (AGI) to calculate alternative minimum taxable income (AMTI). These adjustments are necessary because AMT uses a different set of rules and deductions than regular income tax.
Common AMT adjustments include:
- Preference items: These are items that are deductible for regular income tax purposes but not for AMT purposes. Examples include certain tax-exempt interest, certain deductions for personal exemptions, and certain depreciation deductions.
- Exemptions: There are exemptions available for AMT, which can reduce the amount of tax owed.
Why are AMT adjustments important?
- AMT liability: AMT adjustments are used to calculate AMTI, which determines whether a taxpayer owes AMT.
- Tax planning: Understanding AMT adjustments is important for effective tax planning, as they can affect a taxpayer’s overall tax liability.
It’s important to note that AMT adjustments 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.
