Question

Olga is married and files a joint tax return with her husband. What amount of AMT exemption may she deduct under each of the following alternative circumstances?

Filling Status Exemptions Phase out Begins at this level of AMTI Phase out complete for this level of AMTI
Married filing jointly $84,500 $160,900 $498,900
Married filing separately 42,250 89,450 249,450
Head of household and single 54,300 120,700 337,900

a. Her AMTI is $90,000
b. Her AMTI is $180,000
c. Her AMTI is $500,000

Answer 1

a. Her AMTI is $90,000

Because her AMTI does not excéed threshold of $160,900 her AMT exemption is not phased out and she is entitled to the full exemption amount of $84,500

b Her AMTI is $180,000

Because her AMTI exceed the threshold of $160,900, she must phase out her exemption and is entitled to:

84,500 - {(180,000 -160,900) × 25% } = $ 79,725(entitlement)

c. Her AMTI is $500,000

She is not allowed to deduct any exemption amount as it is entirely phased out as shown below

$84,500 -{(500,000-160,900) × 25%} = -275. Less than zero