Your tax bill could increase under the AMT in a number of ways, including: If you are subject to the AMT, your tax bill could be significantly higher than it would be otherwise. If one or more of the above factors apply to you, consider talking to your tax advisor to see if you may be able to reduce your exposure to AMT.

Exercising incentive stock options that are 'deep in the money' (on which gain is usually deferrable and taxed as capital gain income).

Earning significant interest income (usually tax-exempt) from certain private activity municipal bonds.

Other factors that can cause susceptibility to the AMT are: Note that these deductions have the potential to be disallowed or treated differently under the AMT system than under the normal ordinary income tax system.

Interest on second mortgages and interest on home equity loans used for purposes other than home improvement.

Among the most common factors that can make an individual subject to the AMT are substantial deductions for: If your AMT tax bill is higher, that's the tax you'll owe.Ĭertain deductions and types of income can influence whether or not you are subject to the AMT.

The TaxCaster can help you estimate both amounts.

Another method is to see what you might owe under the ordinary tax system and compare it to what you might owe under the AMT. The IRS maintains a calculator, the IRS AMT Assistant, to help determine if you may be subject to the AMT. If you were subject to it last year and you have a similar income and tax situation this year, you will most likely be subject to it again.

There are no guaranteed tests to determine in advance if you are subject to the AMT.

2021 tax caster