From ‘liquid biopsies’ to precision medicine, these five developments will change cancer care in the next decade. Learn more.
by AARP.org, AARP, March 24, 2008
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.
Please leave your comment below.
You must be logged in to leave a comment.
Get tips and resources to protect yourself from fraud and see the latest scam alerts in your state.
Members save 15% on in-store purchases of frozen yogurt, treats and apparel.
Exclusive program for members from The Hartford.
AARP members receive exclusive member benefits & affect social change.
You are leaving AARP.org and going to the website of our trusted provider. The provider’s terms, conditions and policies apply. Please return to AARP.org to learn more about other benefits.
Your email address is now confirmed.
Manage your email preferences and tell us which topics interest you so that we can prioritize the information you receive.
Explore all that AARP has to offer.
In the next 24 hours, you will receive an email to confirm your subscription to receive emails
related to AARP volunteering. Once you confirm that subscription, you will regularly
receive communications related to AARP volunteering. In the meantime, please feel free
to search for ways to make a difference in your community at