R2 - AMT & Other Taxes Flashcards
a. ATM Exemption Amt
Single: $72,900 - [(AMTI - $518,400) * 25%]
MFJ: $113,400 - [(AMTI - $1,036,800) * 25%]
MFS: $56,700 - [(AMTI - $518,400) * 25%]
AMT Exemption is always positive.
First number in formula is Full Exemption amt
Formula is only used when AMTI is greater than full exemption amt
- Adjustments
P - PAL A - Accelerated Depreciation N - NOL I - Installment income of a dealer C - Contracts T - Tax deductions - S - Standard Deduction
PANIC increases or decreases
TS only increases
- Preference Items
P - Private activity bond interest income
P - Percentage Depletion deduction
P - Pre-1987 accelerated depreciation
3Ps always increase
- AMT Credit
AMT paid can be C/O as a credit over regular tax only (not AMT)
CF is forever.
AMT paid because of T, S, Private Bonds, and Percentage Depletion is never recovered.
AMTI Computation
Regular Taxable Income (+/-) Adjustments (+) Itemized Deductions - Taxes reduced by tax refunds (+) Preference Items (=) AMTI
AMT Tax Credits
Foreign Tax Credit Dependent Care Adoption CTC Contributions to retirement plans Residential Energy Credit EIC
Net Investment Income Tax
Form 8960
Rate: 3.8%
Applies to Investment income over $200K (Single, HOH); $250K (MFJ)
Kiddie Tax
Total Unearned income of child
(-) $1,100 (or investment expense if greater)
(=) Unearned income of child taxed at Child’s rate
(-) $1,100
(=) Unearned income of child taxed at 1041 rate
Net unearned income of child (Interest and Dividend Tax)
Can be reported on parent’s return (if $1,100 - up to $11K) or in child’s return.
AMT calculation
AMTI (-) Exemption (=) AMT Base (*) AMT Rate (=) Tentative AMT
AMT Rate
26% for the first $197,900
28% over $197,900
Additional Medicare tax
Rate: 0.9%
Form 8959
Imposed on wages >$250K (MFJ); >$125K(MFS); $200K (others)