The AMT (alternative minimum tax) is an additional tax system that calculates the tax liability twice. The AMT was introduced as a part to enforce the belief that all taxpayers should pay a minimum share of their income to the federal government, regardless of whether they have many deductions or not. The purpose of AMT was to restrict the tax benefits of taxpayers whose incomes were above a certain threshold

1. How To Calculate AMT?
The AMT is a supplement to the regular income tax
system and ensures that taxpayers who have
significant deductions are not completely shielded
from paying taxes. For those affected individuals, the
extra deduction or credit they claimed in their income
tax returns is subject to AMT

2. Calculate Taxable income
Step 1
Add back preferential tax
Step 2
Add 30% of capital gains
Step 3
Subtract the dividend gross-
up
Step 4

3. Subtract $40,000
Step 5
Subtract personal credits
Step 6
Calculate federal income
tax
Step 7