How do I calculate the alternative minimum tax (AMT)?
To calculate the amount of your alternative minimum tax (commonly referred to as the “AMT”), you should use IRS Form 6251, which will walk you through the necessary steps to calculate your alternative minimum taxable income (which is basically your adjusted gross income with certain deductions and exemptions added back in). Once you have calculated your alternative minimum tax income, Form 6251 will have you lower that income by your AMT exemption, subject to any applicable phaseout. Finally, your AMT will be determined based upon the applicable alternative minimum tax rate.
If your AMT liability is lower than your regular tax liability, then you simply pay your regular tax liability. If the AMT is higher, however, you must pay that amount instead of your regular tax liability.