AMT adjustments to income involve adding back specific tax-favorable deductions or income deferrals from regular taxable income to compute Alternative Minimum Taxable Income (AMTI). Key adjustments ...
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AMT adjustments to income involve adding back specific tax-favorable deductions or income deferrals from regular taxable income to compute Alternative Minimum Taxable Income (AMTI). Key adjustments include adding back state/local taxes (SALT), the standard deduction, incentive stock option (ISO) exercise profits, and accelerated depreciation, Private Activity Bond Interest, NOL deductions, Passive Activity Losses. Look over FORM 6251. If you take the Standard Deduction: Form 6251 starts with your adjusted gross income (AGI) and does not add back itemized deductions, as you didn't take them. If you Itemize: Your taxable income from Form 1040 is used, but specific deductions on Schedule A are reversed. If your itemized deductions are high, they "increase" your regular taxable income, but they are added back on Form 6251, which can trigger an AMT liability.
So as the STD Deduction gets added back to compute AMTI. Using Itemized Deductions may create a lower tax liability, less gets added back to compute AMTI than when taking the standard deductions. If you remove the AMTI adjustments from the itemized deductions though your AGI is higher and tax rate maybe higher. It is just a math game. You are not required to enter all the deductions and can claim a lower amount but, make sure your return is completed before assuming the TT tax liability is correct that is shown (switch between screens as it often recomputes when deciding what works best.
So make sure to go back through the interview and answer you want to itemize and on the Info wks it should also indicate you want to itemize. The Form 6250 should then NOT add the standard deduction back. If it still does, have you fully updated your TT software? (Many VPN's and virus checkers do not allow updates through so it can erroneously say up to date when it is not, make sure to allow TT through or temporarily turn them off to do updates).
You also maybe subject to Net Investment Income Tax Form 8960 that flows to 1040 Line 23. That is 3.8% on any income over a certain threshold. In general, net investment income for purpose of this tax, includes, but isn't limited to: interest, dividends, certain annuities, royalties, and rents (unless derived in a trade or business in which the NIIT doesn't apply),income derived in a trade or business which is a passive activity or trading in financial instruments or commodities, net gains from the disposition of property such as stocks, bonds, mutual funds, and real estate (to the extent taken into account in computing taxable income), other than property held in a trade or business to which NIIT doesn't apply, and generally net gains from the sale of an active partnership or S corporation ownership interests.
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