Alert
Close

Watch the NASCAR race on Sunday at the Indianapolis Motor Speedway. Join the Drive to End Hunger!

Highlights

Open

Contests and
Sweeps

Safe Driving in 2014 Sweepstakes

Learn how AARP Driver Safety can help you stay safe—and enter for a chance to win $1,000. See official rules. 

Driver Safety

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

AARP Books

Visit the Money Section

Enjoy titles on retirement, Social Security, and becoming debt-free.

webinars

Learn From the Experts

Sign up now for an upcoming Money webinar or find materials from a past session. 

Jobs You Might Like

most popular
articles

Viewed

What is the Alternative Minimum Tax?

Q: What is the Alternative Minimum Tax? How do I evaluate my exposure to AMT? How do municipals affect AMT?

A: The Alternative Minimum Tax is an added tax structure put in place some years ago to make sure that even those who took advantage of large deductions and exotic tax shelters paid income tax. It has received much publicity lately, because the amounts subject to it have not been adjusted for inflation. As a result, many taxpayers now considered middle income have found themselves subject to it.

It is nearly impossible to explain concisely how to evaluate AMT exposure. The instructions to Form 1040 contain a helpful worksheet which will give you an idea if you have exposure. And if completing the worksheet indicates you have exposure, you should complete Form 6251 to actually compute the amount.

Interest received from "private activity" municipal bonds, while exempt from regular income tax, is taxable for AMT purposes. Private activity bonds are those that municipalities issue to provide funds to entice businesses to locate there by using bond proceeds to buy and construct the business property, then repay them from rental proceeds paid by the business. If you won municipal bond mutual funds, the funds will tell you how much tax-free interest is subject to AMT.

These questions are actual inquiries submitted by taxpayers to our AARP Tax-Aide Program. The AARP Tax-Aide Program is a volunteer-run, free tax-preparation and assistance program offered to low- and middle-income taxpayers with special attention to those age 60 and older. Our volunteers are trained and IRS-certified to understand individual federal-tax issues. Our volunteers provide tax assistance as a public service and cannot guarantee the accuracy of the information provided.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

The Cheap Life

Jeff Yeager Cheap Life Ultimate Cheapskate AARP YouTube web series save money

Catch the latest episode of The Cheap Life starring Jeff Yeager, AARP's Ultimate Cheapskate. Watch

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

AARP Credit card from Chase

Members can get cash back rewards on purchases with the AARP® Credit Card from Chase.

AARP Financial Services

Info on saving for education from AARP® College Savings Solutions from TIAA-CREF.

Member Benefits

Join or renew today! AARP members receive exclusive member benefits & affect social change.