Alternative Minimum Tax

There are two changes that affect the alternative minimum tax (AMT) for individuals.

Increased exemption amount. For tax years beginning after 1997, the minimum AMT exemption amount for a child under age 14 is increased to $5,000. The child's exemption amount is also no longer dependent on the parent's alternative minimum taxable income.

New election for foreign tax credit limit. You can elect to use a simpler computation for figuring the AMT foreign tax credit limit. This computation uses regular foreign-source taxable income, instead of requiring the computation of AMT foreign-source taxable income. You can only make this election for the first tax year beginning after 1997 for which you claimed an AMT foreign tax credit. The election applies to all later tax years unless it is revoked with the consent of the IRS.

More information. See the Instructions for Form 6251, Alternative Minimum Tax-Individuals, for more information.

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