Alternative Minimum Tax

The Alternative Minimum Tax was created by Congress to prevent people from using loopholes to avoid paying taxes.  The way your AMT is calculated is similar to the way your regular tax is calculated except a lot of the deductions that you were able to take for regular tax are no longer allowed.  If your AMT turns out to be higher than your regular tax, you will have to include the difference on Line 45 of your 1040.

Most of us millennials will not have to worry about paying AMT unless we’ve reduced our taxes by taking a lot of itemized deductions (mainly in real estate or property taxes).  But the only way to know whether you have to pay AMT or not for sure is to fill out Form 6251.

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