The Truth About Alternative Minimum Tax
The alternative minimum tax is imposed at a certain percentage, rather than being calculated according to tax formulas. The alternative minimum tax can be imposed on individuals or corporations, as well as on estates and trusts. The percentage of minimum tax is imposed at different percentage amounts, depending on what is being taxed.
For example, the alternative minimum tax on individuals is higher than the tax imposed on corporations, as a percentage. If the taxes where to be calculated using individual deductions and other formulas, the tax percentage may be greater or lesser, depending on the specific circumstances. In many cases, those filing as single, may see a lesser tax burden when using the alternative minimum tax.
When individuals use the Alternative minimum tax to calculate their tax burden, they would utilize a flat rate for deductions. In other words, the individual would simply take a deduction, pre determined by the government, rather than calculating individual deductions. In some cases, it may be beneficial to calculate deductions individually to lessen the tax burden and in others, it may not be.
The flat percentage rate which can be utilized when using the alternative minimum tax, vary for those filing as single and those filing jointly. In general, the alternative minimum tax is just as beneficial to couples as it is for singles, depending on their combined yearly salary.The rate of alternative minimum tax may also vary for capital gains, but it is generally the same as it is for regular income.