Final answer:
The correct answer to the student's question is (a) Exemption. The AMTI is reduced by an exemption to determine the alternative minimum tax base. The Earned Income Tax Credit (EITC) is also a critical component in assisting low-income taxpayers.
Step-by-step explanation:
To help ensure that low-income taxpayers are NOT required to pay the alternative minimum tax, AMTI is reduced by a(n) exemption amount to determine the alternative minimum tax base. The correct answer is (a) Exemption. Taxable income is calculated as adjusted gross income minus deductions and exemptions. Various tax rates then apply to different income levels.
Among the relevant tax provisions for low-income taxpayers is the Earned Income Tax Credit (EITC), which assists the working poor by providing a tax credit that increases with income up to a certain point. The EITC is a significant program aimed at reducing poverty and incentivizing work. It adapts according to the number of children and the filing status of the household.