Find Out If You Have To Pay the Alternative Minimum Tax

Every year taxpayers need to consider whether they will have to pay the Alternative Minimum Tax (AMT). The AMT was enacted in 1982 and limits tax benefits from a variety of deductions. It's designed to make sure wealthy individuals pay at least some tax.

Because the levels at which the AMT is triggered are not automatically adjusted for inflation, as are regular tax thresholds, some non-rich taxpayers have found themselves required to pay the AMT in recent years. It usually results in a much higher tax bill.

The AMT Assistant, a tool provided by the Internal Revenue Service (IRS), is intended to provide a simple test for taxpayers who fill out their tax returns without using software to determine whether they may be subject to the AMT.

To use the IRS's AMT Assistant, you just answer a few simple questions about entries on your draft 1040 and the system does the rest. You will see the results immediately on your computer screen.

Yes or no

Based on your entries, the results will tell you that either you do not owe the AMT or that you must go further and complete Form 6251 to find out if you owe the AMT. The IRS says it takes about five to ten minutes to fill out the questionnaire.

Questions include things like “did you claim an accelerated depreciation?” or “did you claim deductions from a farm tax shelter?” Entries are anonymous and the information will be used only for the purpose of determining your eligibility. All entries are erased when you exit or start over.

Before you start, you should have your draft 2011 Form 1040 available, completed through Line 44. The AMT Assistant can be used by individuals, tax practitioners and community or public service organizations.