Table of Contents
- What Is Form 6251: Alternative Minimum Tax-Individuals?
- Understanding Form 6251: Alternative Minimum Tax-Individuals
- How to File Form 6251: Alternative Minimum Tax-Individuals
- Special Considerations
- What Is the Alternative Minimum Tax?
- Who Has To Pay the AMT?
- How Many People Pay the Alternative Minimum Tax?
- The Bottom Line
What Is Form 6251: Alternative Minimum Tax-Individuals?
Form 6251: Alternative Minimum Tax-Individuals is an IRS tax form you use to figure out if you owe alternative minimum tax (AMT).
If you're a higher-income taxpayer, you might claim deductions that lower your regular taxes, but the AMT caps those deductions to make sure you pay enough taxes. If it applies to you, you'll pay the AMT instead of your standard income taxes.
Key Takeaways
- Form 6251 determines if you owe AMT instead of standard income tax.
- The AMT ensures wealthy people pay their fair share; it's a parallel system to regular income tax.
- The Tax Cuts and Jobs Act reduced how many people pay AMT.
- For 2024, exemptions start at $85,700 for individuals and $133,300 for joint filers, phasing out at $609,350 and $1,218,700.
- In 2025, exemptions rise to $88,100 for individuals (phase-out at $626,350) and $137,000 for joint filers (phase-out at $1,252,700).
Understanding Form 6251: Alternative Minimum Tax-Individuals
You need to check each year if the AMT applies to you; depending on your income, it might not.
The AMT runs parallel to regular income tax. It started in 1969 to catch taxes from wealthy folks avoiding payments.
It limits itemized deductions you can claim. For instance, state and local taxes aren't deductible under AMT, and you can't take the standard deduction.
Important note: AMT has two rates, 26% and 28%, compared to the seven regular brackets from 10% to 37%.
How to File Form 6251: Alternative Minimum Tax-Individuals
AMT hits you if you have income types with special tax breaks or certain deductions.
Your Form 1040 has a worksheet for basic AMT checks, but Form 6251 is more precise. You can use software or hire a tax professional.
Some forms have AMT versions, like AMT Form 1116 for foreign tax credit. Don't attach them unless told to.
Calculate your tax under regular rules and AMT, then pay the higher one. Claim an exemption based on your status.
AMT exemptions are higher than standard but phase out at certain incomes. In 2024, it's $85,700 for singles (rising to $88,100 in 2025) and $133,300 for joint (to $137,000 in 2025). Phase-outs start at $578,150 for singles and $1,156,300 for joint in 2024, adjusting to $626,350 and $1,252,700 in 2025.
You can find all pages of Form 6251 on the IRS website.
Special Considerations
Without inflation adjustments, AMT affected more people than planned. Congress fixed this with annual tweaks, then permanently indexed exemptions to inflation in the 2012 American Taxpayer Relief Act.
In 2019, AMT collected $4.7 billion, just 0.3% of individual tax revenue, down from $36.2 billion in 2017, thanks to TCJA changes like higher exemptions and phase-outs starting in 2018.
What Is the Alternative Minimum Tax?
The AMT is an extra tax on top of your regular federal income tax. It applies if you take specific deductions or have certain income, ensuring everyone pays fairly. You calculate it with Form 6251.
Who Has To Pay the AMT?
If your income exceeds AMT exemption levels, you might owe it. Thresholds are $85,700 for singles and $133,300 for joint in 2024, rising to $88,100 and $137,000 in 2025.
How Many People Pay the Alternative Minimum Tax?
In 2022, only 0.1% of U.S. households paid AMT, due to TCJA protections for high earners. If TCJA provisions expire in 2025, it could jump to 4.1%.
The Bottom Line
The AMT is a parallel system to make high earners pay fairly. Use Form 6251 to see if you owe AMT or standard tax. Exemptions and phase-outs adjust yearly for inflation, and TCJA cut down on who pays it.
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