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What is Form 6251: Alternative Minimum Tax

Form 6251: Alternative Minimum Tax (Individuals) [3] is the form taxpayers must fill out to determine whether or not they are subject to the dreaded Alternative Minimum Tax [4] (AMT). The AMT is another way of calculating your tax liability and those subject to its wrath will see their tax liability increase, as certain deductions are disallowed under AMT.

As scary as the AMT itself is, the form is only two pages with 54 “questions.”

Simple, right?

Who Has to File Form 6251?

Technically, everyone. Sorry to be the bearer of bad news. 🙁

Everyone is required to fill out Form 6251 to determine whether AMT applies or not. Fortunately for those who file their taxes electronically with the help of software, the software should calculate this for you. You may be subjected to AMT but you won’t be subjected to the fun and enjoyment of filling out Form 6251! If you are opting to do it by hand, I recommend using the IRS’s 2010 AMT Assistant [5] because it’ll tell you in 5-10 minutes whether or not you need to fill out Form 6251. In order to use this tool, you’ll have to have a draft of your 2010 tax return completed through Line 44, which is where you enter this information.

I can save you a bit of time though, if you claimed or received any of the following, the IRS will want you to fill out Form 6251:

If you didn’t, then it comes down to some other factors and for that you’ll have to use the AMT Assistant.

Why AMT Sucks

It sucks because it excludes certain deductions and thus increases the tax liability of anyone subjected to AMT. It was intended to affect only the wealthiest of taxpayers but when it was created, they forgot to index for inflation. As a result, more and more taxpayers get caught up in the AMT and Congress, rather than dealing with it, simply pass adjustments that reduce the number of people affected.

You might be surprised that AMT was originally created to target 155 high-income households, according to Wikipedia, and it’s affecting far greater numbers today.

Hopefully you won’t get caught up by AMT, unfortunately the only way to know is by filling out Form 6251.