Form 6251, Alternative Minimum Tax - Individuals

This form ensures that high-income individuals, corporations, estates, and trusts pay at least a minimum amount of tax, even if they have substantial deductions or credits that could otherwise eliminate their tax liability.

  • Part I - Alternative Minimum Taxable Income: Calculates the Alternative Minimum Taxable Income (AMTI). It begins with your regular taxable income and then adds or subtracts AMT “preference items.” These preference items are adjustments to your income due to differences between the regular tax laws and the AMT laws. Examples include differences in the depreciation schedules for certain assets, certain types of tax-exempt interest, and certain deductions allowed under regular tax law but not under AMT laws.
  • Part II - Alternative Minimum Tax (AMT): Calculates the AMT itself. It starts with your AMTI, subtracts an exemption amount that depends on your filing status, and then applies a tiered tax rate of 26% or 28%. However, if your AMTI is high enough, you’ll start to lose part of your exemption, which effectively increases your tax rate.
  • Part III - Tax Computation Using Maximum Capital Gains Rates: Used if you have qualified dividends or capital gains. The AMT has its own tax rates for long-term capital gains and qualified dividends, just like regular tax laws do. So, if you have these types of income, you must complete Part III to calculate the correct tax.