Alternative Minimum Tax Puns

I work for a successful tech startup company, and I'm looking to exercise my ISO shares a year in advance of any (hopefully large) exit in order to minimize my taxes when selling. This is bringing me into the oh so fun world of calculating AMT. *champagne problems*

I've been reading up on the AMT exemption of $73,600 for individuals. Does this mean that I can exercise up to the amount of shares where Profit ((Fair Market Value - Exercise Price) * # of shares) is less than $73,600 without paying any AMT?

This is where my research is pointing me to and what I've been hearing from co-workers, but AMT calculators on different websites seem to show different results.

Does regular income add to AMTI?

As the title says, I'm an American working in the UK. I've been reading through my prepared US tax return. I don't fully understand the different credits, and more importantly why I have a balance on the credits (ie. it seems the person who prepared my return didn't fully claim all my possible credits).

Below are my rounded numbers for "total foreign tax paid" minus "foreign tax cr claimed".

General Limitation Income --> Foreign Tax Credit --> Balance Available = $50

Passive Income --> Foreign Tax Credit --> Balance Available ~ 15K

General Limitation Income --> Alt Min Tax Credit --> Balance Available ~ $3K

Passive Income --> Alt Min Tax Credit --> Balance Available ~ $25K.

The UK tax rate is much higher than the US. I don't have any US investments but I would like to open one once I move back to the US. I would appreciate any explanation or a link to an ELI5 resource to understand this better. Thank you.

Sorry about the flair. I could find no Flair for "Federal Income Tax."

I have been wrestling with several "Kiddies" earning over $10,000 in unearned income (Unemployment Compensation) and trying to find the correct answer. Revenue Procedure 2019-44 clearly states:

>For taxable years beginning in 2020, for a child to whom the § 1(g) "kiddie tax" applies, the exemption amount under §§ 55(d) and 59(j) for purposes of the alternative minimum tax under § 55 may not exceed the sum of (1) the child's earned income for the taxable year, plus (2) $7,900.

Not a problem reading that, but I am not seeing this implemented in the instructions for Line 5 of Form 6251 and am seeing other tax references saying that the AMT Exemption for "Kiddie Tax" purposes remains the same as it is for other taxpayers as changed by the SECURE Act. I thought this was undone by the Further Consolidated Appropriations Act .

Was there subsequent guidance after Rev. Proc. 2019-44?

My tax software is following the 2020 Form 6251 instructions, but I think they are both wrong.

Anyone have any concrete information on this.

20 y/o (will be 21 this year), WA State

I received unemployment starting at the end of March for the rest of the year due to my job shutting down, and I received a total of $19,567 and paid $1,965 in federal taxes. From my previous job, I earned a total of $4,380 and has $350.85 withheld, making it so I paid a total of 2315 in federal taxes this year. I will be claimed as a dependent, and am a full time student.

When I went to file on turbo tax, it asked if I supported more than 50% of my living expenses with my income (and that unemployment DID NOT count) and I hit no, which than TurboTax said I now owed a base of 1.5k in taxes. It also says it needs my parents tax information for form 8615, which when I looked into it is a Kiddie Tax that might make me pay even more in taxes due to my parents income bracket.

I then went on to H and R Block, because I felt like that was wrong, and currently it says I get a refund of $192, but I still have to fill out Form 8615 as well as file forms for the Alternative Minimum Tax, which when I looked into it I had no clue how I qualified for given I made less than 25k the whole year.

I’m confused as to why I need to file a Kiddie Tax, as while I am a dependent I am not a minor.

https://itep.org/60-fortune-500-companies-avoided-all-federal-income-tax-in-2018-under-new-tax-law/#:~:text=Earlier%20this%20year%2C%20ITEP%20reported,%2C%20US%20Steel%2C%20and%20Whirlpool.

I have single source of income via a full-time job with an employer who withholds taxes from my semimonthly paycheck. Before calculating my AMT, I owed around $150 on my federal taxes, but once I calculated my AMT, which included incentive stock exercises, my tax bill went up to around $7,000. Will this be subject to the tax underpayment penalty, or does that only apply to regular wages (in which case, I'm under the $1,000 threshold there, and should be ok)? Thanks!

Hello,

I've just been working through my taxes for 2019 on TurboTax and I've come up with an AMT liability of approx $570 which I was not expecting.

I live and work in the UK and have a 2019 income as follows:

UK Foreign Salary Income: $87,288.

Approximately $100 interest income in the UK, not taxable in the UK.

UK Income Tax Paid: $20,358.

On my US Income tax, I am able to claim $12,382 in FTC.
From 2018. I carried over $2807 of unused regular FTC and $9,700 of unused AMT FTC.

However according to Form 1116 AMT, my final figure is $3506 leaving me with the $570 odd AMT liability. I have been unable to find similar scenarios of US expats being caught by AMT via foreign tax credit and wanted to sense check with you all. Let me know if you need anymore info, thanks.

From 2000 to 2008, the lowest tax bracket was $0–$9,500, and the next tax bracket $9,501–$38,000. In October 2008, these changed to $0–$14,000, and $14,001–$48,000. Now, coming up to 14 years later, after significant increases to costs of living, as well as increases to benefits and minimum wage, why are these still the same?

Someone working 2 days a week on minimum wage earns more than $14,000 a year. Even a single 25 y/o on Jobseeker Support earns more than $14,000 a year. If the point of increasing benefits and minimum wage is to help lift people out of poverty, why not also increase tax bracket upper thresholds so that less of that money is taken away? (In fact, what's even the point of charging tax on benefits? Genuinely curious.)

I fully understand how marginal tax rates work, but increasing incomes required to keep up with increasing costs of living results in higher effective tax rates on all but those earning less than the lowest threshold. If tax brackets were last adjusted after 8 years in 2008, aren't we now, approaching 14 years later, overdue for them to be adjusted again?

My husband sold some of his company stock (it’s a private company if that makes a difference) during a stock buyback in 2018.

We sold about 160k worth. During the most recent tax season, we were informed we now owe 72k in taxes because of the AMT. (Our accountant also mentioned this was one of the nastiest tax returns he had ever seen.)

We are kicking ourselves in the butt for not consulting an advisor before participating in the buyback. Although we had anticipated owing taxes, we certainly weren’t anticipating owing that much. My husband has taxes taken out of his paycheck and he makes about 150k a year. Should I be seeking a second opinion about the taxes we owe or does this seem about right?

In 2018 my wife and I planned on buying a house so I sold about 40 stocks and ETF's towards down payment. To offset the capital gains a bit I bought RSP's. I paid myself by dividend through my incorporated business. Also some small T5's for savings and stock dividends.

Just finished entering everything into Turbo Tax and an alert came up saying I am subject to AMT. Not sure if the capital gains or the dividends triggered it. I didn't qualify for any of the potential ways to reduce it.

Near the end there was a carry forward page describing next years RSP totals and T691 for the AMT which is about $2000.

Does anyone know when I pay this total on line T691?

I've read it's possible to reclaim it back in the future - is it easy to explain how that is possible?

Any suggestions are much appreciated.

My father sued a company for making him sick, then died, then his estate won the suit. His estate consisted of his new wife, my sister, and I. The award was divided by 4 (his wife, the estate (essentially his wife again), my sister, and I. It came out to 700K each for my sister and I.

Our accountant has told us that even though we got this from the estate, it has triggered the Alternative Minimum Tax, which means we each have to pay 378,000.

The estate attorneys sent our information to local CPAs prior to the distribution to us and they agreed.

It just doesn't sound right to me, though. We are going to take it to another CPA for a second opinion.

I have tried to read and understand it, but honestly, it is over my head. The CPA cited sources for his decision and I trust him, but at the same time, that is a lot of money to pay, especially when I don't understand.

Does this seem right to you? And if so, can you explain it like I'm a 44 year old who doesn't understand?

Thank you!

I filled out my taxes using H&R Block online this year, and it says I have an AMT of an additional $469. My AGI this year was $180,255. Does this seem right? Should I "research" further or just live with it? I don't want to overdo it, as in the end its not all that much more, but it bugs me.

A lot of people having been saying that we need a minimum wage increase, like Obama proposed recently, to rectify the problem that once again prices are ahead of wages, particularly in the lower half of the economic spectrum.

I've reacted with skepticism and downright dismissal of this proposal because I think, it doesn't address the chief issue which is the dismal state of the job market, and places an increased burden on small business and the minimum wage labor market, and not to mention, the distortive effects on the market.

However, the proponents of a minimum wage increase have a point that the working poor is a serious issue, and the ancillary benefits of increased spending can't hurt. They may not help enough to make a difference, but they can't hurt.

So I propose an alternative: a Negative Income Tax

The most well-known advocate for it was Milton Friedman. Here's a writup of him with regards to this in the New York Times

Here's how I see it would work.

Step 1: Eliminate or significantly reduce the minimum wage. Scrap Social Security, Scrap food stamps, welfare, and most of the rest of the social safety net. Tear up the personal income tax code and replace it with a flat tax. Downsize the IRS as a result.

Step 2: Start ouch with each citizen over lets say 16 getting a refundable tax credit of say 10,000 dollars. This means they get 10,000 dollars if they file a tax return, regardless of whether they work or not. A family of four, with two teenagers would get 40,000. For every dollar they earn, this tax credit gets reduced by 50 cents. So if you make 10,000 dollars, they only get a 5000 dollar supplement. If our family of four was all working at McDonalds making 10k a year, they would get 40,000 from wages and 20,000 supplemented for a total of 60, just the parents and they'd still have 40. By 20,000, they get zero and start paying taxes, at lets say 10-20%.

The beauty of this is, you won't starve if you're unemployed, but if you want any better standard of living then 10,000 p.a., you have to work. But the perverse incentives of the welfare system are gone and with a greatly reduced minimum wage, the cheap labor market opens up dramatically, as all sorts of jobs that were too expensive to hire for, suddenly become available. Competition goes up, and cheap labor would actually have to compete for labor, causing immediate

I've read articles on the Alternative Minimum Tax but I can't quite wrap my head around it. I know this isn't a community of tax professionals, but I'm hoping someone has run into this situation before and can offer some directional guidance.

My company was recently acquired and I've got about $500,000 in incentive stock options that will finish vesting around the end of next year - about $390,000 will be available for exercise by the end of 2017. Cost to exercise it all will be about $30,000.

I'm wondering if there is any benefit to exercising as much as possible now in order to hold and qualify for long term capital gains, or if any long term cap gains benefits would be undone by the AMT. If there's no point in waiting, I'd just as soon exercise and sell now, eat the short term cap gains tax, and diversify.

If it's necessary for the math, I'm married, filing jointly, and our combined income for 2017 (without any exercising) will probably be around $235,000.

Any thoughts would be appreciated.

I'd think that when I have nothing in the deduction section but the state tax (CA), AMT is very unlikely. Am I wrong about that? How popular is AMT? Does this mean in the subsequent years I should never be bothered with finding ways to get tax deduction?

I'm nowhere near being rich and honestly think my effective tax rate is too high. What are the things I can do?

I recently filed my federal and state taxes for 2018 on H&R Block's Website. Everything was going fine and both my federal and state returns were reported as "accepted". Today I remembered that I Exercised options with an ISO I was given from my company. They gave me a form 3921 but when I initially researched whether I needed to put this on my return for 2018 I saw that it said I do not need to report this on my taxes until I sell that stock. Now I am seeing that I need to report my Alternative Minimum tax for the year that I exercised the stock options.

Is this correct? and if so, do i need to file an amended return? Also, I am reading that there is an exemption amount for AMT, is there a way to know if I am covered by that exemption if my AMT for the stock options is under 8K?

I've tried to find information about the AMT and led myself down a rabbit hole on the internet of unclear information. Can someone explain it in simple terms or point me somewhere that does?