Author Topic: AMT (Alternative Minimum Tax) and Captial Gains  (Read 514 times)

Aggie1999

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AMT (Alternative Minimum Tax) and Captial Gains
« on: January 05, 2018, 08:43:10 AM »
Given the below scenario am I understanding AMT correctly for 2018?

- Single filer, no deductions other than the $12k standard deduction
- No state income tax
- $100k in W2 salaried income after retirement and HSA contributions deducted from gross income
- $90k in long term capital gains

- Long term capital gains tax calculation: $90,000 x 15% = $13,500
- AMT tax calculation: ($190,000 - $70,300 (AMT single filer deduction) - $19,700 (long term capital gains already taxed))  x 26% = $26,000
- Total tax owed for 2018: $39,500

Is the above correct?
« Last Edit: January 05, 2018, 08:57:18 AM by Aggie1999 »

Aggie1999

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Re: AMT (Alternative Minimum Tax) and Captial Gains
« Reply #1 on: January 05, 2018, 01:49:23 PM »
No AMT tax experts here?

Rocketman

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Re: AMT (Alternative Minimum Tax) and Captial Gains
« Reply #2 on: January 05, 2018, 02:36:03 PM »
For all AMT I Never use any back of the envelope calculations. I always run the complete tax scenario through our tax program. I have been bitten too many times not to do so.

Use the prior year program for your projections the little differences will not matter (except for 2017 to 2018).

Aggie1999

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Re: AMT (Alternative Minimum Tax) and Captial Gains
« Reply #3 on: January 05, 2018, 04:18:16 PM »
For all AMT I Never use any back of the envelope calculations. I always run the complete tax scenario through our tax program. I have been bitten too many times not to do so.

Use the prior year program for your projections the little differences will not matter (except for 2017 to 2018).

Hard to use a 2017 tax program for 2018 estimation considering how much the phase out changed with the new tax code, etc. Just trying to get an idea if I understand how AMT works. I'm not overly concerned about the various deductions that you have to add back in to get the AMTI number as I am single, no kids, no house/mortgage, etc. So no real deductions other than the $12k standard deduction for 2018. Basically one of the worst situations one can be in tax wise.

Undecided

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Re: AMT (Alternative Minimum Tax) and Captial Gains
« Reply #4 on: January 05, 2018, 05:13:23 PM »
Given the below scenario am I understanding AMT correctly for 2018?

- Single filer, no deductions other than the $12k standard deduction
- No state income tax
- $100k in W2 salaried income after retirement and HSA contributions deducted from gross income
- $90k in long term capital gains

- Long term capital gains tax calculation: $90,000 x 15% = $13,500
- AMT tax calculation: ($190,000 - $70,300 (AMT single filer deduction) - $19,700 (long term capital gains already taxed))  x 26% = $26,000
- Total tax owed for 2018: $39,500

Is the above correct?

After 15 years of paying the AMT, 2017 will be my last year! Nonetheless, I've paid some attention to the AMT changes.

Why do you think you would pay AMT? While your capital gains affect the phaseout of the AMT exemption, they are not themselves subjected to the AMT rate. The phaseout threshold is now very high.

If it did apply, you wouldn't subject the LTCG to the AMT rate, just the excess of other (ordinary) income over the exemption, so your tax would be about half the amount you proposed.

seattlecyclone

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Re: AMT (Alternative Minimum Tax) and Captial Gains
« Reply #5 on: January 05, 2018, 05:24:06 PM »
I don't believe any of your long-term capital gains would be subject to the 26% rate under the AMT. Where is this $19,700 figure coming from, and how is it separate from your $90k of total capital gains?
I made a blog! https://seattlecyclone.com/

The Roth IRA was named after William Roth, who represented Delaware in the US senate from 1971-2001. "Roth" is a name, not an acronym. There's no need to capitalize the final three letters.

MDM

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Re: AMT (Alternative Minimum Tax) and Captial Gains
« Reply #6 on: January 05, 2018, 07:14:57 PM »
Is the above correct?
No.

No AMT, and $28,910 federal income tax.

Paycheck frequency:AnnualAnnual
Paycheck ItemsEarner #1Earner #2Annual
Gross Salary/Wages
$100,000$0$100,000
W-2 Box 1
$100,000$0$100,000
Non-paycheck incomeAnnualAnnualAnnual
Long term capital gains$90,000$90,000
1040 Total Income
$190,000$0$190,000
1040 AGI
$190,000
Payroll TaxesAnnualAnnualAnnual
Social Security$6,200$0$6,200
Medicare$1,450$0$1,450
Income Taxes
Federal tax$28,9102018, S, std.$28,910
Total income taxes$36,560$36,560

Filing Status11=S, 2=MFJ, 3=HOH
Adult #1
Age35
Full-time student?00
AGI$190,000
Std. Deduct.$12,000
Act. Deduct.$12,000
Exemption$0
Taxable$178,000
1040 Tax$28,910
Tax after n-r credit$28,910
Net Tax$28,910
VersionV10.03

Aggie1999

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Re: AMT (Alternative Minimum Tax) and Captial Gains
« Reply #7 on: January 05, 2018, 07:39:42 PM »
Guess I am pretty confused here. Maybe my confusion is where the $70,300 AMT exemption applies. Guessing from the responses the AMT exemption gets subtracted from the $100,000 in ordinary income, correct? I was incorrectly thinking it got subtracted from the AMTI ($190,000 in my example).

So actual AMT tax amount in my example would be:

($100,000 - $70,300) x 26% = $7,722

Is this correct?

MDM

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Re: AMT (Alternative Minimum Tax) and Captial Gains
« Reply #8 on: January 05, 2018, 07:50:05 PM »
For a worked example, see the 'Form6251' tab in the case study spreadsheet after you input your information on the 'Calculations' tab.