What is the Alternative Minimum Tax?

The Alternative Minimum Tax (AMT) is a supplemental income tax imposed by the state of California on taxpayers who benefit from certain tax preferences. It is designed to ensure that taxpayers pay at least a minimum amount of tax. The AMT is calculated separately from the regular federal or state income tax. Generally, the taxpayer will use the AMT instructions to figure their AMT after regular taxes are calculated. Taxpayers must complete Form 6251 in order to figure their AMT. Taxpayers must first add back certain items such as certain itemized deductions, certain personal exemptions, and other adjustments. Then, the taxpayer must subtract the AMT exemption amount from the resulting amount before computing the tax. This amount is referred to as the "Alternative Minimum Taxable Income" (AMTI). The taxpayer must then use the AMT tax rates and exemptions to calculate their tax. The AMT is an important part of the California tax system. It is designed to help ensure that all taxpayers pay at least a minimum amount of tax, regardless of the deductions and exemptions they are claimed. By understanding the Alternative Minimum Tax and how it works, taxpayers can make sure they are meeting their tax obligations and not facing any potential penalties.

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What is the Alternative Minimum Tax?

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