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In looking at the alternative minimum tax (AMT), it requires that certain deductions be added back to taxable income, such as medical and dental deductions, taxes, and the other items in part 1 of form 6251 (adjustments and preferences). The calculation results in "alternative minimum taxable income," line 21 of form 6251. After dealing with exemptions, the "alternative minimum taxable income" is taxed at flat rates of 26% or 28% or as calculated in part IV. If the AMT is more than the tax computed in the regular method, then the higher tax is owed. Once the taxpayer gets into the AMT, then higher deductions do not reduce the taxes, since they are added back for the AMT calculation. I use Turbo Tax and it seems to handle the AMT with no problem, and I'd recommend the program. It suggests some ways to avoid AMT, primarily by shifting deductions into taxable years where they will not be erased by AMT. If anyone has had a bad experience with Turbo Tax and AMT, I'd like to hear about it.
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