DOCSLIB.ORG

2020 Instructions for Form 8615

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
2020 Instructions for Form 8615 Userid: CPM Schema: instrx Leadpct: 100% Pt. size: 8.5 Draft Ok to Print AH XSL/XML Fileid: … ions/I8615/2020/A/XML/Cycle05/source (Init. & Date) _______ Page 1 of 6 14:29 - 8-Feb-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury 2020 Internal Revenue Service Instructions for Form 8615 Tax for Certain Children Who Have Unearned Income Section references are to the Internal Revenue Code unless 3. The child either: otherwise noted. a. Was under age 18 at the end of 2020, b. Was age 18 at the end of 2020 and didn’t have earned Future Developments income that was more than half of the child's support, or c. Was a full-time student at least age 19 and under age 24 at For the latest information about developments related to Form 8615 the end of 2020 and didn’t have earned income that was more than and its instructions, such as legislation enacted after they were half of the child's support. published, go to IRS.gov/Form8615. (Earned income is defined later. Support is defined below.) What’s New 4. At least one of the child's parents was alive at the end of Change in tax rates. Recent legislation modified the tax rates and 2020. brackets used to figure the tax on 2020 unearned income for certain 5. The child doesn’t file a joint return for 2020. children. For tax year 2020, dependent children with unearned income above a certain amount are taxed at the parents' individual For these rules, the term “child” includes a legally adopted child tax rate. Taxpayers may also elect to retroactively use the tax rates and a stepchild. These rules apply whether or not the child is a based on the parents’ individual tax rate for dependent children with dependent. These rules don’t apply if neither of the child’s parents unearned income in tax years 2018 and 2019. were living at the end of the year. Support. Your support includes all amounts spent to provide the Reminder child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. To figure Election to modify the tax on your unearned income. Recent your child’s support, count support provided by you, your child, and legislation allows for taxpayers to elect to modify their tax on others. However, a scholarship received by your child isn’t dependent children with unearned income for tax years 2018 and considered support if your child is a full-time student. For details, 2019. The election allows taxpayers to recalculate the tax on see Pub. 501, Dependents, Standard Deduction, and Filing dependent children with unearned income for these years to be Information. based on the parent’s individual tax rate instead of the previous tax rates (condensed trust and estates tax rates). Certain January 1 birthdays. Use the following chart to determine For tax years 2018 and 2019, if you choose to modify the tax on whether certain children with January 1 birthdays meet condition 3 your unearned income using the tentative tax based on the tax rate under Who Must File. of your parent, you will need to use the 2018 or 2019 Instructions for Form 8615 and file an amended return, Form 1040-X. See IRS.gov/ IF you were born on... THEN, at the end of 2020, Form1040X for more information about amending a tax return. If you make this election, include a statement or an attachment with your you are considered to be... amended return specifying “election to modify tax on unearned January 1, 2003 18* income.” January 1, 2002 19** General Instructions January 1, 1997 24*** Purpose of Form *This child isn't under age 18. The child meets condition 3 only if the child didn't have earned income that was more than half of the child's For children under age 18 and certain older children described support. below in Who Must File, unearned income over $2,200 is taxed at the parent's rate if the parent's rate is higher than the child's. If the **This child meets condition 3 only if the child was a full-time student child's unearned income is more than $2,200, use Form 8615 to who didn't have earned income that was more than half of the child's figure the child's tax. support. ***Don’t use Form 8615 for this child. Unearned Income For Form 8615, “unearned income” includes all taxable income other than earned income. Unearned income includes taxable interest, The parent may be able to elect to report the child’s interest, ordinary dividends, capital gains (including capital gain TIP ordinary dividends, and capital gain distributions on the distributions), rents, royalties, etc. It also includes taxable social parent’s return. If the parent makes this election, the child security benefits, pension and annuity income, taxable scholarship won’t have to file a return or Form 8615. However, the federal and fellowship grants not reported on Form W-2, unemployment income tax on the child’s income, including qualified dividends and compensation, alimony, and income (other than earned income) capital gain distributions, may be higher if this election is made. For received as the beneficiary of a trust. more details, see Form 8814, Parents’ Election To Report Child's Who Must File Interest and Dividends. Form 8615 must be filed for any child who meets all of the following conditions. Additional Information For more details, see Pub. 929, Tax Rules for Children and 1. The child had more than $2,200 of unearned income. Dependents. 2. The child is required to file a tax return. Feb 08, 2021 Cat. No. 28914R Page 2 of 6 Fileid: … ions/I8615/2020/A/XML/Cycle05/source 14:29 - 8-Feb-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. • Files Form 2555 (relating to foreign earned income), Incomplete Information for Filing • Has a net loss from self-employment, or If the parent's taxable income, filing status, or net unearned income • Claims a net operating loss deduction. of the parent's other children isn't known by the due date of the child’s return, reasonable estimates can be used. Enter “Estimated” Earned income. Earned income includes wages, tips, and other next to the appropriate line(s) of Form 8615. When the correct payments received for personal services performed. information is available, file Form 1040-X, Amended U.S. Individual If the child is a sole proprietor or a partner in a trade or business Income Tax Return. in which both personal services and capital are material income-producing factors, earned income also includes a Instead of using estimates, the child can get an automatic reasonable allowance for compensation for personal services, but 6-month extension of time to file. For details, see Form 4868, not more than 30% of the child’s share of the net profits from that Application for Automatic Extension of Time To File U.S. Individual trade or business (after subtracting the deduction for one-half of Income Tax Return. self-employment tax). However, the 30% limit doesn’t apply if there An extension of time to file isn’t an extension of time to pay. are no net profits from the trade or business. ! If capital isn’t an income-producing factor and the child’s CAUTION personal services produced the business income, all of the child’s gross income from the trade or business is considered earned Amended Return income. In that case, earned income is generally the total of the If the parent’s income changes after the child’s return is filed, the tax amounts reported on Form 1040, line 1; Schedule 1 (Form 1040), must be refigured using the adjusted amounts. The child's tax must lines 3 and 6; or Form 1040-NR, line 1a. also be refigured if there are changes to the net unearned income of Earned income also includes any taxable distribution from a other children for whom the parent is required to file a Form 8615. If qualified disability trust. A qualified disability trust is any nongrantor the child's tax changes, file Form 1040-X to correct the child's tax. trust: Alternative Minimum Tax 1. Described in 42 U.S.C. 1396p(c)(2)(B)(iv) and established solely for the benefit of an individual under 65 years of age who is A child whose tax is figured on Form 8615 may owe the alternative disabled, and minimum tax. For details, see Form 6251, Alternative Minimum 2. All the beneficiaries of which are determined by the Tax—Individuals, and its instructions. Commissioner of Social Security to have been disabled for some Net Investment Income Tax part of the tax year within the meaning of 42 U.S.C. 1382c(a)(3). A child whose tax is figured on Form 8615 may be subject to the Net A trust won’t fail to meet (2) above just because the trust’s corpus Investment Income Tax (NIIT). NIIT is a 3.8% tax on the lesser of net may revert to a person who isn’t disabled after the trust ceases to investment income or the excess of the child’s modified adjusted have any disabled beneficiaries. gross income (MAGI) over the threshold amount. Use Form 8960, Net Investment Income Tax, to figure this tax. For more information on NIIT, go to IRS.gov/NIIT.
Load more

Recommended publications
  • Reemployment of Retired Members: Federal Tax Issues
    MARYLAND STATE RETIREMENT AND PENSION SYSTEM REEMPLOYMENT OF RETIRED MEMBERS - FEDERAL TAX ISSUES There are two key tax issues related to the reemployment of individuals by the State or participating governmental units who are retirees of the Maryland State Retirement and Pension System: (1) the tax qualification of the plans under the Maryland State Retirement and Pension System; and (2) the possibility of the imposition of the 10% early distribution tax on benefits received by retirees. The following information is provided in order that State and participating employers may better understand the rules. 1. PLAN QUALIFICATION – A defined benefit retirement plan, such as the plans under the Maryland State Retirement and Pension Plan, must meet many requirements under the Internal Revenue Code in order to be a “qualified plan” under the Code and receive certain important tax advantages. One of those requirements provides that, in general, a member may not withdraw contributions made by the employer, or earnings on such contributions, before normal retirement, termination of employment, or termination of the plan. Rev. Rul. 74-254, 1974-1 C.B. 94. “Normal retirement age cannot be earlier than the earliest age that is reasonably representative of a typical retirement age for the covered workforce.” Prop. Treas. Reg. Sec. 1.401(a) – 1(b)(1)(i). A retirement age that is lower than 65 is permissible for a governmental plan if it reflects when employees typically retire and is not a subterfuge for permitting in-service distributions. PLR 200420030. Therefore, as a matter of plan qualification, retirement benefits may be paid to an employee who reaches “normal retirement age” once the employee retires and separates from service, and the reemployment of such a retiree by the same employer should not raise concerns regarding plan qualification.
    [Show full text]
  • The Alternative Minimum Tax
    Updated December 4, 2017 Tax Reform: The Alternative Minimum Tax The U.S. federal income tax has both a personal and a Individual AMT corporate alternative minimum tax (AMT). Both the The modern individual AMT originated with the Revenue corporate and individual AMTs operate alongside the Act of 1978 (P.L. 95-600) and operated in tandem with an regular income tax. They require taxpayers to calculate existing add-on minimum tax prior to its repeal in 1982. their liability twice—once under the rules for the regular Table 2 details selected key individual AMT parameters. income tax and once under the AMT rules—and then pay the higher amount. Minimum taxes increase tax payments Table 2. Selected Individual AMT Parameters, 2017 from taxpayers who, under the rules of the regular tax system, pay too little tax relative to a standard measure of Single/ Married their income. Head of Filing Married Filing Household Jointly Separately Corporate AMT Exemption $54,300 $84,500 $42,250 The corporate AMT originated with the Tax Reform Act of 1986 (P.L. 99-514), which eliminated an “add-on” 28% bracket 187,800 187,800 93,900 minimum tax imposed on corporations previously. The threshold corporate AMT is a flat 20% tax imposed on a Source: Internal Revenue Code. corporation’s alternative minimum taxable income less an exemption amount. A corporation’s alternative minimum The individual AMT tax base is broader than the regular taxable income is the corporation’s taxable income income tax base and starts with regular taxable income and determined with certain adjustments (primarily related to adds back various deductions, including personal depreciation) and increased by the disallowance of a exemptions and the deduction for state and local taxes.
    [Show full text]
  • Treasury's Upcoming Role in Formulating Tax Policy C
    Treasury's Upcoming Role in Formulating Tax Policy C. Eugene Steuerle "Economic Perspective" column reprinted with permission. Document date: October 18, 2002 Copyright 2002 TAX ANALYSTS Released online: October 18, 2002 The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. © TAX ANALYSTS. Reprinted with permission. It is said that in every crisis is opportunity. In every political crisis, moreover, something will be done -- for good or ill -- to appear to deal with the crisis. While tax policy has generally been run out of the White House for a number of years in both Republican and Democratic administrations, that trend will be forced to reverse itself. Within the Executive Branch, only the Treasury Department is equipped to deal well with the upcoming political crisis surrounding the imposition of the alternative minimum tax on tens of millions of taxpayers. Whether it finds opportunity in this task -- one from which most politicians shy -- remains to be seen. The convoluted nature of our tax system is worthy of reform, but it is not a crisis. The strange imposition of the AMT on so many taxpayers, along with its strong bias against families with children, is a crisis. It is not an economic or even administrative crisis so much as one of politics. The economy can certainly withstand the economic repercussions of this somewhat crazy tax policy, and IRS can certainly administer the tax: At least regarding the major items involved, a computer check will find most errors.
    [Show full text]
  • 2021 Instructions for Form 6251
    Note: The draft you are looking for begins on the next page. Caution: DRAFT—NOT FOR FILING This is an early release draft of an IRS tax form, instructions, or publication, which the IRS is providing for your information. Do not file draft forms and do not rely on draft forms, instructions, and publications for filing. We do not release draft forms until we believe we have incorporated all changes (except when explicitly stated on this coversheet). However, unexpected issues occasionally arise, or legislation is passed—in this case, we will post a new draft of the form to alert users that changes were made to the previously posted draft. Thus, there are never any changes to the last posted draft of a form and the final revision of the form. Forms and instructions generally are subject to OMB approval before they can be officially released, so we post only drafts of them until they are approved. Drafts of instructions and publications usually have some changes before their final release. Early release drafts are at IRS.gov/DraftForms and remain there after the final release is posted at IRS.gov/LatestForms. All information about all forms, instructions, and pubs is at IRS.gov/Forms. Almost every form and publication has a page on IRS.gov with a friendly shortcut. For example, the Form 1040 page is at IRS.gov/Form1040; the Pub. 501 page is at IRS.gov/Pub501; the Form W-4 page is at IRS.gov/W4; and the Schedule A (Form 1040/SR) page is at IRS.gov/ScheduleA.
    [Show full text]
  • The Fairtax Treatment of Housing
    A FairTaxsm White Paper The FairTax treatment of housing Advocates of tax reform share a common motivation: To iron out the mangled economic incentives resulting from statutory inequities and misguided social engineering that perversely cripple the American economy and the American people. Most importantly, ironing out the statutory inequities of the federal tax code need not harm homebuyers and homebuilders. The FairTax does more than do no harm. The FairTax encourages home ownership and homebuilding by placing all Americans and all businesses on equal footing – no loopholes, no exceptions. A specific analysis of the impact of the FairTax on the homebuilding industry/the housing market shows that the new homebuilding market would greatly benefit from enactment of the FairTax. The analysis necessarily centers upon two issues: (1) Whether the FairTax’s elimination of the home mortgage interest deduction (MID) adversely impacts the housing market (new and existing) in general, and home ownership and the homebuilding industry specifically; and (2) Whether the FairTax’s superficially disparate treatment of new vs. existing housing has an adverse impact on the market for new homes and homebuilding. The response to both of the above questions is no. Visceral opposition to the repeal of a “good loophole” such as the MID is understandable, absent a more thorough and empirical analysis of the impact of the FairTax vs. the MID on home ownership and the homebuilding industry. Such an analysis demonstrates that preserving the MID is the classic instance of a situation where the business community confuses support for particular businesses with support for enterprise in general.
    [Show full text]
  • Repeal the Alternative Minimum Tax
    The Contemporary Tax Journal Volume 5 Issue 2 Winter 2016 Article 11 2-12-2016 Repeal the Alternative Minimum Tax Branden Wilson San Jose State University Follow this and additional works at: https://scholarworks.sjsu.edu/sjsumstjournal Part of the Taxation-Federal Commons, Taxation-Federal Estate and Gift Commons, and the Taxation- Transnational Commons Recommended Citation Wilson, Branden (2016) "Repeal the Alternative Minimum Tax," The Contemporary Tax Journal: Vol. 5 : Iss. 2 , Article 11. Available at: https://scholarworks.sjsu.edu/sjsumstjournal/vol5/iss2/11 This Focus on Tax Policy is brought to you for free and open access by the Graduate School of Business at SJSU ScholarWorks. It has been accepted for inclusion in The Contemporary Tax Journal by an authorized editor of SJSU ScholarWorks. For more information, please contact [email protected]. Wilson: Repeal the Alternative Minimum Tax Repeal the Alternative Minimum Tax major difference between the regular income tax and the AMT is that the AMT does not By: Branden Wilson, MST Student allow some of the deductions allowed under the normal tax rules. This makes it stealthy as it creeps up to surprise a taxpayer who is What is the AMT? denied a large state tax deduction allowed under the regular tax rules and becomes a The alternative minimum tax, or AMT, can be victim to a higher tax under the AMT. described as a parallel tax system that operates on a different set of rules. The AMT is an The taxpayers most likely to get pulled into income tax. It affects individuals, the AMT are middle-to-high income earners corporations, estates and trusts.
    [Show full text]
  • 2016 Tax Brackets FACT Oct
    FISCAL 2016 Tax Brackets FACT Oct. 2015 By Kyle Pomerleau No. 486 Economist Introduction Every year, the IRS adjusts more than 40 tax provisions for inflation. This is done to prevent what is called “bracket creep.” This is the phenomenon by which people are pushed into higher income tax brackets or have reduced value from credits or deductions due to inflation, instead of any increase in real income. The IRS uses the Consumer Price Index (CPI) to calculate the past year’s inflation and adjusts income thresholds, deduction amounts, and credit values accordingly. Rather than directly adjusting last year’s values for annual inflation, each provision is adjusted from a specified base year. For more information, see Methodology, below. Estimated Income Tax Brackets and Rates In 2016, the income limits for all brackets and all filers will be adjusted for inflation and will be as follows (Table 1). The top marginal income tax rate of 39.6 percent will hit taxpayers with adjusted gross income of $415,050 and higher for single filers and $466,950 and higher for married filers. Table 1. 2016 Taxable Income Brackets and Rates (Estimate) Rate Single Filers Married Joint Filers Head of Household Filers 10% $0 to $9,275 $0 to $18,550 $0 to $13,250 15% $9,275 to $37,650 $18,550 to $75,300 $13,250 to $50,400 25% $37,650 to $91,150 $75,300 to $151,900 $50,400 to $130,150 The Tax Foundation is a 501(c)(3) 28% $91,150 to $190,150 $151,900 to $231,450 $130,150 to $210,800 non-partisan, non-profit research 33% $190,150 to $413,350 $231,450 to $413,350 $210,800 to $413,350 institution founded in 1937 to 35% $413,350 to $415,050 $413,350 to $466,950 $413,350 to $441,000 educate the public on tax policy.
    [Show full text]
  • Traditional Individual Retirement Arrangements (Iras)
    (6-2010) TRADITIONAL INDIVIDUAL RETIREMENT ARRANGEMENTS (Traditional IRAs) List of Required Modifications and Information Package (LRMs) (For use with prototype traditional IRAs intending to satisfy the requirements of Code § 408(a) or (b).) Material added since the 3-2002 LRMs is underlined. This information package contains samples of provisions that have been found to satisfy certain specific requirements of the Internal Revenue Code as amended through the Worker, Retiree, and Employer Recovery Act of 2008 (“WRERA”), Pub. L. 110-458. Such language may or may not be acceptable in specific IRAs, depending on the context. We have prepared this package to assist sponsors who are drafting IRAs. To expedite the review process, sponsors are encouraged to use the language contained in this package. Part A, provisions 1-12, applies to individual retirement accounts under Code § 408(a). Part B, provisions 13-22, applies to individual retirement annuities under § 408(b). ________________________________________________________________ PART A: ACCOUNTS - Trust or custodial accounts under Code § 408(a). (1) Statement of Requirement: The IRA is organized and operated for the exclusive benefit of the individual, Code § 408(a). Sample Language: The account is established for the exclusive benefit of the individual or his or her beneficiaries. If this is an inherited IRA within the meaning of Code § 408(d)(3)(C) maintained for the benefit of a designated beneficiary of a deceased individual, references in this document to the “individual” are to the deceased individual. (2) Statement of Requirement: Maximum permissible annual contribution and restrictions on kinds of contributions, Code §§ 72(t)(2)(G), 219(b), 408(a)(1), 408(d)(3)(C), 408(d)(3)(G), 1 408(p)(1)(B) and 408(p)(2)(A)(iv).
    [Show full text]
  • 2020 Instructions for Form 6251
    Userid: CPM Schema: Leadpct: 100% Pt. size: 9.5 Draft Ok to Print instrx AH XSL/XML Fileid: … ions/I6251/2020/A/XML/Cycle07/source (Init. & Date) _______ Page 1 of 13 14:42 - 8-Jan-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury 2020 Internal Revenue Service Instructions for Form 6251 Alternative Minimum Tax—Individuals Section references are to the Internal Revenue 4. The total of Form 6251, lines 2c and basis amounts may also differ for Code unless otherwise noted. through 3, is negative and line 7 would the AMT. be greater than line 10 if you didn’t take General Instructions into account lines 2c through 3. Recordkeeping You must keep records to support items Future Developments Purpose of Form reported on Form 6251 in case the IRS For the latest information about Use Form 6251 to figure the amount, if has questions about them. If the IRS developments related to Form 6251 and any, of your alternative minimum tax examines your tax return, you may be its instructions, such as legislation (AMT). The AMT is a separate tax that asked to explain the items reported. enacted after they were published, go to is imposed in addition to your regular Good records will help you explain any IRS.gov/Form6251. tax. It applies to taxpayers who have item and arrive at the correct AMT. certain types of income that receive Keep records that show how you favorable treatment, or who qualify for What's New figured income, deductions, etc., for the certain deductions, under the tax law.
    [Show full text]
  • Section 501 on the Ground That All of Its Profits Are Payable to One Or More Organizations Exempt from Taxation Under Section 501
    F. IRC 502 - FEEDER ORGANIZATIONS 1. Introduction An organization described in IRC 502 does not qualify for exemption under any paragraph of IRC 501(c). The purpose of this article is to discuss some of the basic issues presented by IRC 502, to explain how it should be interpreted and applied, and to consider the amount of unrelated business activity that an exempt charitable organization may engage in. IRC 502 provides that an organization operated for the primary purpose of carrying on a trade or business for profit shall not be exempt under IRC 501 on the ground that all of its profits are payable to one or more organizations exempt under IRC 501. 2. Purpose of Feeder Provisions A brief consideration of the reasons for the enactment of IRC 502 provides some insight as to how it should be interpreted. There was growing concern, particularly after World War II, about the increasing amount of business activities carried on by exempt organizations, particularly, charitable organizations. In a series of cases involving taxable years prior to 1951, certain organizations popularly called "feeder organizations" were held exempt from federal income tax under the predecessor to IRC 501(c)(3), even though their sole activity was engaging in commercial business, and the only basis for exemption was the fact their profits were payable to specified exempt organizations. See Roche's Beach, Inc. v. Commissioner, 96 F. 2d 776 (1938); C. F. Mueller Company v. Commissioner, 190 F. 2d 120 (1951). The courts held that the exclusive purpose required by the statute was met when the only object of the organization was religious, scientific, charitable, or educational, without regard to the method of obtaining funds necessary to effectuate the objective.
    [Show full text]
  • Taxation and the Bankruptcy Code
    Chapter 4: Other Recommendations and Issues TAXATION AND THE BANKRUPTCY CODE COMMENTS PREPARED BY PROFESSOR JACK WILLIAMS RECOMMENDATIONS 4.2.1 Clarify provisions of the Bankruptcy Code on providing reasonable notice to governmental units. 4.2.2 Amend the Bankruptcy Code to prescribe that to the extent that a tax claim presently is entitled to interest, such interest shall accrue at a stated statutory rate. 4.2.3 The Commission should submit to the Advisory Committee on Bankruptcy Rules of the Judicial Conference (“Rules Committee”) a recommendation that the Federal Rules of Bankruptcy Procedure require that notices demanding the benefits of rapid examination under 11 U.S.C. § 505(b) be sent to the office specifically designated by the applicable taxing authority for such purpose, in any reasonable manner prescribed by such taxing authority. 4.2.4 Conform § 346 of the Bankruptcy Code to IRC 1398(d)(2) election; also conform local and state tax attributes that are transferred to the estate to those tax attributes that are transferred to the bankruptcy estate under IRC § 1398. 4.2.5 Amend 11 U.S.C. § 507(a)(8) and 523(a)(1) to provide for the tolling of relevant periods in the case of successive filings. Thus, in the event of successive bankruptcy filings, the time periods specified in § 507(a)(8) shall be suspended during the period in which a governmental unit was prohibited from pursuing a claim by reason of the prior case. 945 Bankruptcy: The Next Twenty Years 4.2.6 Amend 11 U.S.C. § 507(a)(8)(ii) to toll the 240-day assessment period for both pre- and post assessment offers in compromise.
    [Show full text]
  • Alternative Minimum Tax Pains! Presented By: Melinda Garvin, EA OH NO! AMT Another Miserable Tax!
    Alternative Minimum Tax Pains! Presented by: Melinda Garvin, EA OH NO! AMT Another Miserable Tax! . What really caused . Is There Anything AMT to show up? You Can Do? AMT Objectives Identify AMT adjustment and preference items. Distinguish between temporary and permanent AMT adjustments. Review Form 6251, Alternative Minimum Tax – Individuals. Determine what, if any, damage control can be done to minimize or eliminate AMT. Let’s learn about AMT using a different method…..without our eyes rolling back in our heads! AMT . Form 6251 . Part I – adjustments and preferences . Part II – calculate AMT . Part III – capital gains rates AMT . Adjustments and preferences . Preferences increase AMTI . Adjustments increase or decrease AMTI . Standard deduction and personal exemption deduction not allowed for AMT TWO ENGINES ENGINE REGULAR TAX ENGINE AMT TAX . Some items receive . Adjustments +/- and special treatment for regular tax purposes netting is allowed . Adjustments . Preferences = Bad! . Preferences receive as they always special treatment for increase AMTI regular tax Standard Deduction . Standard deduction, including add’l for elderly/blind is not allowed for AMT . Must stay consistent for reg’l and AMT . If reg’l did not itemize – no entry on 6251 If taxpayer owed AMT – might be able to lower total tax by itemizing even if less than standard deduction – if the itemized deductions are allowed for AMT Reg’l Tax and AMT Personal Exemptions . It’s Simple – they are not allowed for AMT Itemized Deductions . If itemizes – line 1 starts with line 41 from 1040 . AGI less deduction for itemized deductions . Then adds back those not allowed for AMT AMT – Itemized Deductions Item AMT Rule Adjustment on 6251 Medical expenses Medical expenses exceeding 10% of AGI Line 2 – Add back the lesser of 2.5% of AGI if are allowed.
    [Show full text]