What should a taxpayer do when filing the Alternative Minimum Tax (AMT)?

When a taxpayer is subject to the Alternative Minimum Tax (AMT), it is essential to understand that they must pay the higher amount determined between the regular tax liability and the AMT liability. The AMT is designed to ensure that taxpayers who claim certain deductions and exemptions still pay a minimum amount of tax.

In this context, taxpayers calculate both their regular tax and AMT. After determining these amounts, they must then compare the two. If the AMT exceeds the regular tax liability, the taxpayer is required to pay the AMT, as it represents the minimum amount of tax owed under the AMT system. This mechanism prevents higher-income taxpayers from overly diminishing their tax liability through various deductions.

Hence, the requirement to pay the higher of the two amounts ensures compliance with the AMT rules and contributes to the overall fairness of the tax system by minimizing tax avoidance strategies.