Form 4626 AMT: How and When to fill out the Alternative Minimum Tax form
Businesses are required to use IRS Form 4626 to determine the Alternative Minimum Tax (AMT) under section 55 that they are held liable for, unless they qualify as exempt. This post will address the purposes of form 4626, as well as the instructions for the form. If you are new to filing, and wonder what AMT is altogether, you are in the right place.
(Click Image for actual PDF form)
Corporate Alternative Minimum Taxes are calculated in addition to regular taxes. Companies must then compare the two, and are obligated to pay the higher amount. The initial reasoning behind the mandated AMT was to prevent wealthy corporations from using too many tax loopholes that could be found in the regular tax system. Created under the Tax Reform Act of 1986, the AMT has been considered by many to be irrelevant, and a burden to taxpayers. Still, it serves as a great source of income to the government, and many feel that it would be too costly to repeal it. So, in the meantime, companies (and many individuals for that matter) are forced to pay it. Thus, below, we have provided the information you need to know in determining your company’s AMT payments, starting with the IRS stated qualifications for the filing the form.
Generally, companies must file Form 4626 if either of the following apply.
- The corporation’s taxable income or (loss) before the net operating loss (NOL) deduction plus its adjustments and preferences total more than $40,000 or, if smaller, its allowable exemption amount.
- The corporation claims any general business credit, any qualified electric vehicle credit, or the credit for prior year minimum tax.
IMPORTANT NOTE: If the corporation is a “small corporation” exempt from the AMT (as is explained in detail HERE on the actual form), do not file Form 4626.
Despite in many ways being outdated, form 4626 is something that many businesses still must file, and all businesses should at least be aware of. If you need any help in understanding the form, or if you are uncertain as to whether or not your company is one that must fill it out, feel free to contact us below or on the questions page. Also, how do you feel about the AMT in general? Do you hate it and think it should be repealed or amended? Or do you think it still serves a purpose in thwarting a usage of too many tax loopholes? Let us know any ideas or issues you have.