Many have already forgotten all about AMT since TCJA temporarily raised the exemption phase-out based on AMTI, but I had an interesting phenomenon this filing season. TL;DR version, my client had a choice between paying $5K to charity or paying $5K in taxes.
Since TCJA moved so many AMT features into the regular tax system, on a temporary basis, and concurrently raised the AMT exemption phase-out levels, it is much less common to see taxpayers affected by AMT and Form 6251. However, ISOs exercise still counts for AMT, and I had a client whose bottom line was heavily dependent on exactly (to the dollar) how much of a Schedule A deduction they had which was also allowed under AMT.
Here is the scenario with rounded numbers:
AGI: $920K
Deduction: $24,8K std, vs. $24.85K itemized (due to increase $5.6K charity contribution)
Taxable income: $895K vs $895K
AMT: $5.4K vs $0.2K
The surprising thing is, that getting even one dollar over the standard deduction amount into itemized deductions (by giving $5.6K to charity) suddenly nets a $5.2K deduction in tax liability. So the tax liability and charitable deduction offset each other almost dollar for dollar up to about $5K.
Since TCJA moved so many AMT features into the regular tax system, on a temporary basis, and concurrently raised the AMT exemption phase-out levels, it is much less common to see taxpayers affected by AMT and Form 6251. However, ISOs exercise still counts for AMT, and I had a client whose bottom line was heavily dependent on exactly (to the dollar) how much of a Schedule A deduction they had which was also allowed under AMT.
Here is the scenario with rounded numbers:
AGI: $920K
Deduction: $24,8K std, vs. $24.85K itemized (due to increase $5.6K charity contribution)
Taxable income: $895K vs $895K
AMT: $5.4K vs $0.2K
The surprising thing is, that getting even one dollar over the standard deduction amount into itemized deductions (by giving $5.6K to charity) suddenly nets a $5.2K deduction in tax liability. So the tax liability and charitable deduction offset each other almost dollar for dollar up to about $5K.