What is the Alternative Minimum Tax?

The Alternative Minimum Tax (AMT) is a tax designed to ensure that taxpayers who have high incomes pay a minimum amount of tax. It’s calculated differently than the standard tax, and it requires taxpayers to recalculate their taxes using a different set of rules. In Washington State, the AMT applies to individuals and corporations. Individuals must calculate both their regular tax liability, and the AMT liability, and pay the higher of the two amounts. Corporations must also recalculate their taxes, but the calculation is more complex than for individuals because certain tax credits are not allowed and a different tax rate must be used. In most cases, the AMT applies to people with high incomes, who are making over $500,000 or who have large amounts of investment income. There are other, more specific criteria that determine if you must pay the AMT. For example, depending on your income and other factors, the AMT might be triggered if you have large medical expenses, high real estate taxes, or if you itemize deductions. The AMT serves an important purpose, as it helps to ensure that the wealthy pay their fair share of taxes. It also prevents taxpayers from taking advantage of certain deductions that can lead to an unfairly low tax bill. It’s important to pay close attention to the rules surrounding the AMT, as any tax owed must be paid in full by the due date.

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What is the Alternative Minimum Tax?

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