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Alternative Minimum Tax

What is the AMT?

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.

The AMT was originally set up 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.

What should flight crew members do if they think they may be affected by the AMT?

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.

What happens to the per diem deduction if a flight crew member's tax return is hit by the AMT?

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.

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