taxes

What is alternative minimum tax?

 

What is alternative minimum tax?

The Bankrate.com financial term of the day is: "alternative minimum tax" or "AMT."

The alternative minimum tax, or AMT, is an annual source of tax-time turmoil, because it forces some people to figure their taxes twice. To make sure that high earners pay their fair share of taxes, the Internal Revenue Service devised a parallel method of calculating taxes that bars many common deductions. You pay whichever amount is higher: either what the AMT says you owe or what's owed under the regular tax system.

The alternative minimum tax, or AMT, is a sometimes confusing, alternate method of determining how much tax is owed by higher-income taxpayers.

For help making sense of your taxes, visit the Taxes section at Bankrate.com.

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