What Is Tax Form 6251?

IRS Form 6251 calculates the amount of Alternative Minimum Tax (AMT) you may owe during the year if you have earned more than certain income limits. The AMT is a separate tax that you would pay in place of the regular income tax if the AMT were higher.

Read on to find out if and how you need to complete Form 6251. The income limits that require you to file Form 6251 change periodically to keep up with the economy.

The numbers in this article apply to tax year 2020, the tax return you filed in 2021. In addition to your income, some other red flags may require you to pay the AMT.

Definition and examples of form 6251

Form 6251, “Alternative Minimum Tax - Individuals,” is a tax form that calculates whether you are responsible for paying the Alternative Minimum Tax and, if so, how much you must pay.

You add various tax breaks that you may have claimed on your Form 1040 income tax return and then determine the taxes owed.

The AMT was implemented in 1969, when Congress realized that high-income people were reducing their taxable income to the point where they were paying virtually no income taxes.

Who uses form 6251?

The Internal Revenue Code provides exemptions that all taxpayers can claim against their income to determine if they are responsible for the AMT. You only need to use Form 6251 and figure your AMT if your income exceeds certain limits. For fiscal year 2020, they are defined in:

$ 56,700 if you are married but fill out a separate statement
$ 72,900 for all individual filers
$ 113,400 if you are married filing jointly with your spouse, or if you are a qualifying widow

For example, a single taxpayer who earned $ 70,000 in 2020 would not be subject to the AMT because his or her income is below the threshold. However, if they had made $ 75,000, they would have been subject to the AMT.

The AMT rate is 26% on exempt income up to $ 197,900, or only $ 98,950 if you are married and file a separate tax return.2 The rate can increase up to 28% above these limits.

But there are also "phase out" limits. These exemptions begin to decline and eventually disappear in income from:

$ 518,400 for single registrars and married taxpayers filing separate returns
$ 1,036,800 for married taxpayers filing joint returns or eligible widowers or widowers
Other AMT activators
AMT is also activated automatically if you claim certain tax exemptions, regardless of your income. These include:

Accelerated depreciation
Income from Incentive Stock Options
Certain forms of tax-free interest
Income derived from long-term contracts
Investment interest expense
Net operating losses

This list is not exhaustive. Form 6251 details each circumstance that could result in the payment of this tax on lines 2a to 2t.

Where to get form 6251

The IRS provides a link to an interactive 6251 form on its website. You can complete it online and then download a final copy to an electronic file with the IRS and save it with your tax records.

It is also printable, so you can print a blank version and fill it in by hand if you feel more comfortable with this option.

Reputable tax preparation software is also set up to complete this form for you if your income or claimed tax deductions trigger the AMT.

How to complete and read form 6251

Form 6251 is only two pages long, but it's a bit intimidating. The good news is that at the bottom of the first page you will know if you owe this tax and how much you will have to pay.

Part I of Form 6251 covers your income. Line 1 requests your taxable income as reported on line 15 of your 1040 or 1040-SR tax return.

Lines 2a through 2t require you to itemize certain deductions that you claimed on Form 1040. This section lists the other triggers that could make you liable for the AMT.

Line 3 is for "other adjustments". The instructions on the form determine whether you should enter anything here and if so, will guide you through the process.

For example, you may have mistakenly claimed a deduction for mortgage interest paid on a property that is not your primary residence, such as an income property. You would include the amount of this interest on line 3.

Line 4 reports the amount of your income that is subject to the AMT. If you are married and order separately and the amount on line 4 is more than $ 745,200, you must include an additional amount.

Part II includes seven lines (5-11) that calculate the amount of Alternative Minimum Tax you owe.

If the amount on line 11 is more than your federal income tax liability as it appears on your Form 1040, you must pay the AMT.

Can Form 6251 be submitted by email?

You will include Form 6251 when completing Form 1040, as well as any other programs or forms that you must file with your tax return. It can be filed with the rest of your return.

Where to send form 6251

The IRS provides a complete list of postal addresses for Form 1040 tax returns and its accompanying forms and schedules. It is divided by your state of residence, as well as whether you are sending a follow-up payment.

The IRS urged taxpayers to file electronically instead of filing their tax returns, as the limited number of employees led to longer processing times.

How to submit form 6251

You do not need to sign Form 6251. Just be sure to include it when filing your income tax return if your income exceeds the limits listed above.

The instructions and guidelines included in Form 6251 are very precise and extensive, but contact an accountant if you are confused about something or need help.

You can also visit one of the IRS Taxpayer Assistance Centers available nationwide, which you can find using the IRS search tool. Call ahead because you will only be seen by appointment in 2021.

We hope you enjoy watching this video about What Is Tax Form 6251

Source: FreeLegalForms

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