Alternative Minimum Tax: Will You Have to Pay AMT?

The Alternative Minimum Tax isn't as big a problem as it used to be, but millions still have to pay. Are you one of them?

Dan Caplinger
Dan Caplinger
Apr 5, 2014 at 3:55PM
Investment Planning

Many think of the Alternative Minimum Tax as something only rich people pay. But even with tax reform having reduced its bite, the AMT still affects many upper-middle income taxpayers.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about the AMT and how it's a completely separate tax system that can add thousands to your tax bill. Because it uses different deductions and exemptions, the AMT can lead to higher taxes in some cases, especially for those who live in states with high state and local tax burdens. Dan notes that higher AMT exemptions and higher ordinary tax rates should make fewer people subject to AMT, but with almost 4 million taxpayers paying an average of $6,600, it's worth looking at the AMT and considering any measures available to reduce its impact.