AMT

Question 1

List the characteristics of self-employment tax.

Answer 1

1. Social Security is 12.4% (2013) of SE income up to an annual cap;
2. Ceiling is reduced by other wages;
3. Medicare is 2.9% on all SE income.

Question 2

Describe the Alternative Minimum Tax Preference adjustments.

Answer 2

1. Percentage depletion over adjusted basis;
2. Interest on “private activity” municipal bonds (except for bonds issued in 2009 and 2010);
3. Excess intangible drilling costs over 10-year straight line amortization;
4. Pre-1987 accelerated depreciation over straight line.

Question 3

What are the requirements for filing a self-employment income tax return?

Answer 3

Must file a tax return if self-employment income is above $400.

Question 4

When is the alternative minimum tax exemption phased out?

Answer 4

1. Triggered by Alternative Minimum Tax Income over certain thresholds;
2. Phased-out at 25% of amount over trigger.

Question 5

What is the alternative minimum tax rate?

Answer 5

26% up to $175,000;

28% over $175,000.

Question 6

Describe the Alternative Tax Adjustments.

Answer 6

1. Difference between AMT cost recovery and regular tax;
2. No installment method allowed;
3. No standard deduction or personal/dependency exemption allowed;
4. Medical expenses only in excess of 10% of AGI;
5. Interest on home equity loans not allowed unless to improve residence;
6. No phase-out of itemized deductions.