Understanding IRS Form 6251: Alternative Minimum Tax (AMT)
A parallel tax system ensuring high-income taxpayers meet minimum tax obligations, regardless of deductions.
Who Must File Form 6251?
- Income triggers: $81,300+ (Single) / $126,500+ (MFJ) in 2024
- Tax preference items: ISO exercises, large capital gains
- Deduction situations: High SALT, home equity interest, miscellaneous deductions
- Special cases: Tax-exempt private activity bond interest
AMT affects 3-5% of taxpayers but requires calculation for all above threshold incomes.
Key AMT Calculation Components
| Regular Tax | AMT Adjustments |
|---|---|
| Standard/itemized deductions | Adds back SALT, home equity interest |
| Personal exemptions | Eliminates most exemptions |
| Lower capital gains rates | 26%/28% AMT rates apply |
Common AMT Triggers
- Incentive Stock Options (ISOs): Spread on exercise counts as AMT income
- Large capital gains: Can reduce AMT exemption phaseout
- High state taxes: SALT deduction addback
- Tax-exempt bonds: Certain private activity bonds
- Depreciation differences: AMT uses slower depreciation schedules
AMT Planning Strategies
- Timing strategy: Bunch deductions in non-AMT years
- ISO planning: Exercise/sell timing to minimize AMT impact
- AMT credits: Claiming credits in future regular tax years
- Quarterly estimates: Adjusting for expected AMT liability
Related Tax Forms
- Form 1040 (Line 45 for AMT)
- Form 8801 (AMT credit carryforward)
- Form 3921 (ISO reporting)
- Schedule D (Capital gains reporting)
Need AMT Analysis or Planning?
KARME Tax Services provides:
- AMT liability projections
- ISO exercise tax planning
- AMT credit tracking
- Multi-year minimization strategies
Call 972-519-0041 or Request AMT Review
Specialized planning for executives with stock compensation