Alternative Minimum Tax (AMT) 2024 – Introduction
The Alternative Minimum Tax (AMT) is a special tax system designed to ensure that high-income earners pay at least a minimum amount of tax, even if they qualify for a lot of tax breaks under the regular tax system.
The AMT was created to prevent people with very high incomes from using deductions and loopholes to avoid paying taxes altogether.
For 2024, the IRS has raised the AMT exemption, which is the amount of income that’s not subject to the AMT.
What Are the New AMT Exemption Amounts for 2024?
For 2024, the AMT exemption has been raised to £85,700 for single filers and £119,300 for married couples filing jointly.
This means that if your income is below these amounts, you won’t have to worry about paying the AMT.
The AMT exemption phases out for higher earners, starting at £578,150 for single filers and £1,156,300 for married couples.
If your income exceeds these thresholds, you may still have to pay the AMT.
Who is Affected by the AMT?
The AMT typically affects high-income earners who claim a lot of deductions or have complex tax situations.
For example, if you claim a large number of deductions for state and local taxes, home mortgage interest, or investment losses, you might be subject to the AMT.
The AMT ensures that everyone pays at least a minimum level of tax, even if they qualify for a lot of deductions under the regular tax system.
Why Did the IRS Raise the AMT Exemption?
The IRS adjusts the AMT exemption every year to account for inflation.
Without these adjustments, more and more people would be subject to the AMT over time, even if their real incomes haven’t increased.
By raising the exemption, the IRS ensures that the AMT continues to target only the highest-income taxpayers.
Alternative Minimum Tax (AMT) 2024 – Conclusion
The increase in the AMT exemption for 2024 is good news for high-income taxpayers who might otherwise be subject to the AMT.
By raising the exemption, the IRS is helping to ensure that only those with very high incomes and large deductions will have to pay the AMT, while still ensuring that everyone pays their fair share of taxes.
Final thoughts
If you have any queries about the Alternative Minimum Tax (AMT) 2024, or any other US tax matters, then please get in touch.