AMT

[Blonde Lawyer]

I can't seem to understand the results I'm getting via google.  Can someone tell me at what combined income for married filing jointly the AMT will kick in for 2017 taxes?

[sirdoug007]

There isn't an easy answer for that.  You really have to go through the complicated AMT math (or use some software like TurboTax) to calculate the AMT and see if it is higher than the tax would be otherwise.  Basically you are more likely to hit the AMT if you have a LOT of deductions.  If you don't itemize or have deductions just a bit over the standard you probably won't have to deal with the AMT.

Here are some resources:

https://turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Return/Alternative-Minimum-Tax--Common-Questions/INF12072.html

https://www.irs.gov/pub/irs-pdf/f6251.pdf

[seattlecyclone]

It really depends. If your alternative minimum taxable income (taxable income plus some deductions that don't count for the AMT) is less than the AMT exemption of $84,500, you definitely won't owe AMT. There's a big range above that where you probably won't owe AMT, but it gets more likely with higher incomes and more itemized deductions.

[MDM]

As already noted, it depends on the form of your income and expenses.  In the extreme of no state tax, no charitable contributions, standard deduction, income only from wages - i.e., as bland tax-wise as one can be - I believe the AMT never kicks in.  But that likely is an extreme result.

[BigRed]

I was trying to figure this out a year ago, I found an article from 2014 that laid out the rough rule for evaluating AMT.  It's a function of both taxable income under the regular system (i.e. AGI minus deductions and exemptions), and the amount of deductions you take, including personal deductions (but not including mortgage interest and charitable deductions, which are still deductible under AMT).

The summary is that as your income goes up, the amount of deductions required for the AMT to kick in increases. 

At $50k taxable income, you'd need over $57k in deductions to get hit with the AMT. 
At $200k taxable income, the number is around $30k of deductions and exemptions.
At $400k, it's only $16k of deductions/exemptions which is less than a married couple's personal exemptions and the standard deduction. 

You'll pay a marginal rate of anywhere from 25% to 32.5% on any amount of deductions + exemptions above the kick-in amount.

Here is the link:
https://www.kitces.com/blog/evaluating-exposure-to-the-alternative-minimum-tax-and-strategies-to-reduce-the-amt-bite/


Of course, the "good news" is this may be moot.  The just released GOP tax "reform" framework eliminates the AMT and the state and local tax deductions that trigger it.

[Blonde Lawyer]

Thanks all.