AMT and dividends

[WM]

I know the AMT "rules" are ridiculously complicated, but just in terms of which income it affects - it's not related to dividend income, is that correct? Only earned income and capital gains?

 

[Leonidas]

Looking at my return from 2008, it looks like dividends and LT cap gains were separated and taxed at 15%, and the rest was taxed at 26 or 28%. Add the two together and subtract what you figured your regular tax was and that's the AMT. Or it was in my case anyway.

That's just from looking at the forms though - a lot of the numbers came from worksheets that I didn't print out. I'm no tax genius, unless being able to use Turbo Tax better than Treasury Secretary Tim Geithner makes me one.

 

[kaneohe]

Qualified dividends and LTCG are separated out and treated, generally as they are for the regular tax. However, if your income gets high enough, your AMT exemption can be
reduced so that higher dividends and CG can have the effect of increasing your taxes.
Whether you consider that as affecting taxes on dividends is one of semantics......the fact is that your taxes may be higher because your dividends are higher in that range.

 

[audreyh1]

Interest income and dividend income that is not from qualified dividends (which is taxed at 15%) is treated the same as earned income for AMT purposes.

If your capital gains and qualified dividends get high enough, they start to reduce your AMT exemption, so even qualified dividends can impact your AMT.

Audrey

 

[WM]

Thanks for the replies. Should have known it wouldn't be a simple answer

 

[kumquat]

Reading the whole thread cured my dyslexia. I thought it was about ATM's that give dividends.