The alternative minimum tax or AMT is a tax
that was originally intended to prevent higher income individuals from
benefiting from many of the tax deductions that lower income individuals benefit
from. The AMT can be viewed as a separate tax system that may apply to
taxpayers with higher incomes and a lot of deductions. As of 2008,
taxpayers who made over $75,000 and had many deductions could possibly be
affected by
the AMT.
The AMT was originally set up decades ago as a
way to plug loopholes that benefit affluent taxpayer's. Because it was not
adjusted for inflation, what was considered wealthy when the AMT began is now
beginning to hit the upper-middle class.
As mentioned earlier, the AMT is a separate, or
parallel, tax system. If a flight crewmember thinks they might be affected
by the AMT, they should fill out IRS Form 6251. Failure to pay the AMT
could subject a taxpayer to fines imposed by the
IRS if a tax return is ever
examined in an IRS audit.
If the AMT affects a flight crewmember, then
itemized tax
deductions that the flight crewmember may have incurred will not help that
year because the AMT tax will need to be paid instead. That means an
airline crewmember's employee business
expenses and per diem deduction don't result in a lower
tax liability because
those are components of the itemized
deductions for a flight crewmember.
If the AMT affects a taxpayer in a given year,
the taxpayer may get tax
credit for it in future years. While this is beyond the scope of this
article, a link about this subject is provided below.
