Anonymous wrote:It is a different tax system. You don't get all of the regular deductions, but you get a larger standard deduction.

The AMT standard deduction starts to phase out after you reach a certain income level: $115,400 for single people and $153,900 for married filing jointly ($76,950 for married filing separately). It phases out completely for single people with an income above $314,900 and married filing jointly with an income above $465,000 ($232,500 for married filing separately). Therefore, the AMT hits particularly hard on singles with incomes between $115,400 and $314,900 and married couples with incomes between $153,900 and $465,000. That encompasses lots of professionals in the Washington area.

The AMT disallows certain deductions. If you have a somewhat high income and you pay high property and/or state taxes (which cannot be deducted under the AMT), you are likely to hit the AMT. Deductions for mortgage interest and charity contributions are allowed under the AMT, but deductions for state/local taxes and property taxes are not. There is no way around it. As a previous poster said, you need to calculate your taxes both ways (using the regular tax tables and the AMT calculations) and pay whichever is higher. Turbo Tax and other tax programs will do this automatically.

The AMT hits two income couples particularly badly because of the way it calculates allowed exemptions. Neither my husband nor I would be subject to the AMT if we were single and we each had our current income. However, as a married couple we were subject to the AMT. Married filing separately does not solve this issue; you are each still subject to half of what you would have been subject to as a couple.

It is a different tax system. You don't get all of the regular deductions, but you get a larger standard deduction. Everyone is supposed to calculate their tax liability under both systems and pay the higher one. No way to get out of it if our tax liability is higher under that system.

It is an entirely separate method of calculating your tax liability that eliminates or modifies some of the available deductions. There isn't a set income limit, but the folks most likely to end up having to pay it make between $150,000 and $415,000.

Despite being silly in many ways, it is well-designed in the sense that it is hard to circumvent. If you need to pay it, there's a good chance there's no way you're getting around it. Some approaches that might work are itemizing your deductions rather than taking the standard deduction, using your employer's HSA or flex spending accounts, if available, deferring state tax payments, and avoiding taking too many personal deductions.

So I am tentatively doing my tax return for 2013 and it looks like I am going to have to pay AMT tax. Can anyone explain to me what exactly is AMT and is there any way to somehow circumvent having to pay it? What is the taxable income limit before AMT sets in?