What is this alternative minimum tax?

    Published: 06-16-2009
    Views: 8,817
    Goodman & Company Tax Director Art Auerbach discusses the alternative minimum tax and how to file your tax return.

    Host: What is this Alternative Minimum Tax?

    Arthur Auerbach: The Alternative Minimum Tax is actually a parallel tax calculation. When everybody, every American tax payer calculates their tax, you are actually simultaneously doing two taxes. You are doing what's known as the Regular Tax and you are doing the Alternative Minimum Tax and the statute requires you to pay the higher of the two. There are certain things that are not deductible for the AMT, for example, we discussed taxes being deductible on Schedule A of the 1040. None of those taxes are available for the Augment tax. If you have Home Equity liens and you use the Home Equity loans to pay off Credit cards. Buy a boat, buy a car, buy a large screen TV. That Home equity line interest is not available for the AMT but it is available for the regular tax. So the Augment tax is a separate calculation and any tax professional or any program that you use are going to be asking you questions about certain things on the return and you may have to split items apart so that they can do the correct calculation of regular versus AMT.