IRS Form 6251 | Alternative Minimum Tax – Individuals

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IRS Form 6251 is used to compute your Alternate Minimum Tax (AMT), a tax which affects many high income individuals. Under current tax laws, there are many perfectly legitimate deductions that are typically used by wealthy individuals to reduce their tax burden. The purpose of the AMT is to set a limit on these benefits, so that everyone pays their fair share.

If you use any of the common software packages to prepare your taxes, the program will automatically inform you if Form 6251 is necessary for you. If you don’t use tax preparation software, the IRS offers its Alternative Minimum Tax (AMT) Assistant for Individuals. You can easily find the AMT Assistant online at an IRS site.

How to Fill-in

On the first page of the AMT Assistant, you will find a list of items. If you received or claimed any of them, you do not need to continue with the AMT Assistant; you must fill out Form 6251, and you are finished with the AMT Assistant.

If you haven’t, first be sure you have completed Form 1040 up through line 44. Then, when you continue with the AMT Assistant, it will guide you step by step through a series of questions, and most of the answers can be taken directly from your Form 1040. Even if you do have to fill out the Form 6251, the result may still be that you do not have to pay the AMT.

Part 1 of the Form 6251 will determine your Alternative Minimum Taxable Income. Here, too much of the input will come from you Form 1040, as well as from other sources. It is a tedious process without the software, but by following the instructions, line 28 will yield your Alternate Minimum Taxable Income. Compare this result with the amounts indicated on the table adjacent to line 29. The result of that comparison will tell you if you are exempt from the AMT, in which case you have finished your Form 6251.

Part II of the Form 6251 continues the calculation of the actual AMT. Unless you’ve had capital gains or qualified dividend income in this tax year, Line 35 yields the final calculation of your AMT, which you then enter into line 45 of your 1040. If you’ve had capital gains of qualified dividend income then, Part III must be filled out.

Part III will compute the factor needed to adjust the AMT. You will need Form 2555 to complete the work needed here. Line 60 yields the results for Part III. You must take this result and put it into Line 31 in Part II. Then, recalculate the rest of Part II based on this input. The result in Line 35 is the final calculation of your AMT for line 45 of Form 1040.