IRS Form 6251 calculates the amount of alternative minimum tax (AMT) you might owe for the year if you earned more than certain income limits. The AMT is a separate tax that you would pay instead of your regular income tax if the AMT is higher.
Read on to find out whether you have to file Form 6251 and how to do so. The income limits that would require you to file Form 6251 change periodically to keep pace with the economy. The figures in this article apply to the 2020 tax year, the return you filed in 2021. In addition to your income, certain other red flags can 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’re liable for paying the alternative minimum tax and if so, how much you should pay. It adds back various tax breaks you might have claimed on your Form 1040 tax return, then determines your taxes owed.
The AMT was implemented in 1969 when Congress realized that high-income earners were whittling away at their taxable incomes to such an extent that they were paying virtually no income tax at all.
Who Uses Form 6251?
The Internal Revenue Code provides exemptions all taxpayers can claim against their incomes to determine if they’re liable for the AMT. You only need to use Form 6251 and calculate your AMT if your income exceeds certain thresholds. For the 2020 tax year, they’re set at:
- $56,700 if you’re married but filing a separate return
- $72,900 for all single filers
- $113,400 if you’re married and filing a joint return with your spouse, or you’re a qualifying widow(er)
For example, a single taxpayer who earned $70,000 in 2020 would not be subject to the AMT, because their income is below the threshold. However, if they had earned $75,000, they would be subject to the AMT.
The AMT rate is 26% on income over the exemption up to $197,900—or just $98,950 if you’re married and filing a separate return. The rate can increase to 28% above these thresholds.
But there are “phaseout” thresholds as well. These exemptions begin to decrease and eventually disappear at incomes of:
- $518,400 for single filers and married taxpayers filing separate returns
- $1,036,800 for married taxpayers filing joint returns, or qualifying widows or widowers
Other AMT Triggers
The AMT also kicks in automatically if you claim certain tax breaks, regardless of your income. These include:
- Accelerated depreciation
- Income derived from incentive stock options
- Certain forms of tax-exempt interest
- Income derived from long-term contracts
- Investment interest expenses
- Net operating losses
This list is not comprehensive. Form 6251 itemizes each circumstance that could lead to you owing this tax on lines 2a through 2t.
Where To Get Form 6251
The IRS provides a link to an interactive Form 6251 on its website. You can complete it online, then download a final copy to e-file with the IRS and to save with your tax records. It’s also printable, so you can print out a blank version and complete it by hand if you’re more comfortable with that option.
Reputable tax preparation software is set up to complete this form for you as well if your income or claimed tax deductions trigger the AMT.
How To Fill Out and Read Form 6251
Form 6251 is just two pages, but they’re somewhat intimidating. The good news is that you’ll know by the end of the first page whether you owe this tax, and how much you’ll need to pay.
Part I of Form 6251 covers your income. Line 1 asks for your taxable income as reported on line 15 of your Form 1040 or Form 1040-SR tax return. Lines 2a through 2t require you to detail certain deductions you claimed on Form 1040. This section itemizes the other triggers that can make you liable for the AMT.
Line 3 is for “other adjustments.” The instructions for the form determine whether you must enter anything here and if so, walk you through the process. For example, you might have mistakenly claimed a deduction for mortgage interest paid for a property that isn’t your principal residence, such as an income property. You would include the amount of this interest on line 3.
Line 4 tells you the amount of your income that’s subject to the AMT. If you’re married filing separately and the amount on line 4 is over $745,200, you must include an additional amount.
Part II includes seven lines (5 through 11) that calculate the amount of Alternative Minimum Tax you owe.
You must file Form 6251 if the amount on line 7 is higher than the amount on line 10.
If the amount on line 11 is greater than your federal income tax liability as it appears on your Form 1040, you must pay the AMT instead.
You only need to complete the second page (Part III) if you claimed the foreign earned income tax credit and the worksheet instructed you to do so, or if you reported capital gains distributions or qualified dividends on your tax return and if you are also filing Form 2555.
Can Form 6251 Be E-Filed?
You’ll include Form 6251 when you file your Form 1040, just like any other schedules or forms you might be required to submit with your tax return. It can be e-filed along with the rest of your return.
Where To Mail Form 6251
The IRS provides a full list of mailing addresses for Form 1040 tax returns and their accompanying forms and schedules. It’s broken down by your state of residence, as well as whether you’re sending an accompanying payment.
The IRS has urged taxpayers to file electronically instead of mailing their tax returns as limited staff numbers have led to longer processing times.
How To File Form 6251
You’re not required to sign Form 6251. Just be sure to include it when you file your tax return if your income was over the thresholds detailed above.
The instructions and directions included on Form 6251 are very precise and extensive, but reach out to a tax professional if you’re confused by anything or need help. You could also visit one of the IRS Taxpayer Assistance Centers that are available nationwide, which you can find using the IRS search tool. Call ahead, because they’ll only see you by appointment in 2021.
- Form 6251 calculates whether your income is subject to the alternative minimum tax and determines how much you’ll need to pay.
- It effectively adds back certain tax breaks you might have claimed on your Form 1040 tax return.
- Only people with taxable incomes that exceed certain income levels, and taxpayers who claimed some uncommon tax deductions, are required to complete this form and pay the AMT.