AMT (Alternative Minimum Tax)

Category: tax

A parallel tax system designed to ensure that those who take heavy deductions still pay a baseline amount of tax.

AMT is the "loophole killer." It recalculates your tax, ignoring many deductions and credits. If the AMT calculation is higher than your standard tax bill, you have to pay the AMT. It hits high earners with high state taxes or high incentive stock option (ISO) usage.

Common Examples

• The sudden exercise of his incentive stock options triggered a massive AMT bill, far exceeding his standard federal income tax liability.
• Our tax planning service models AMT exposure whenever we prepare for a client’s major financial liquidation or stock option event.