The AMT is essentially a separate federal income tax system with its own tax rates, and its own set of rules governing the recognition and timing of income and expenses. If you're subject to the AMT, your taxes may be calculated twice — once under the regular tax system and again under the AMT system. If your income tax liability under the AMT is greater than your liability under the regular tax system, the difference is reported as an additional tax on your federal income tax return. If you're subject to the AMT in one year, you may be entitled to a credit that can be applied against regular tax liability in future years.
While the AMT takes away personal exemptions (no longer applicable from 2018 to 2025) and a number of deductions, it provides specific AMT exemptions. The amount of AMT exemption that you're entitled to depends on your filing status.
Your exemption amount, however, begins to phase out once your taxable income exceeds a certain threshold. (Specifically, your exemption amount is reduced by $0.25 for every $1.00 you have in taxable income over the threshold amount).
Households and individuals with a high income may be subject to AMT. Speak with a tax professional to determine your situation.
A long-term capital gain is the gain from the sale of a qualifying investment that has been owned for longer than 12 months. A tax is applied to these gains and the rate depends on income level.
Taxpayers may take the greater of the standard deductions or total itemized deductions.
With so many different limits and requirements, we highly recommend consulting a tax professional to make sure your information is in order before April 18, 2023. Speak with a Forme Financial advisor to learn how to keep more of what you earn with proactive tax planning.
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