[needhelpnow]

I am assuming the 7.5% and 10% difference add back for Medical is WRONG because now it is just 10%? Is this an outdated question at this point? or is my understanding wrong? Please advice. Thank you!

~~~~

On their joint tax return, Sam and Joann, who are both over 65 years of age, had adjusted gross income (AGI) of $150,000 and claimed the following itemized deductions:

• Interest of $15,000 on a $100,000 home equity loan to purchase a motor home.

• Real estate tax and state income taxes of $18,000.

• Unreimbursed medical expenses of $15,000 (prior to AGI limitation).

• Miscellaneous itemized deductions of $5,000 (prior to AGI limitation).

Based on these deductions, what would be the amount of AMT add-back adjustment in computing alternative minimum taxable income?

Correct! Interest on home equity loans is not allowed as an AMT deduction and would be added back, as would the real estate and state income taxes.

For regular taxes, medical expenses are limited to 7.5% of AGI; however, for AMT purposes, this is limited to expenses in excess of 10% of AGI, so the difference must be added back ($15,000 – $11,250 = $3,750 add-back). Miscellaneous deductions are limited to 2% of AGI ($5,000 – 3,000 = $2,000 regular deduction) but are added back for AMT purposes. $15,000 + 18,000 + 3,750 + 2,000 = $38,750

[The_AmYam]

Your text isn't old, it has to do with their ages.

Because they are 65, on their “regular” return, their medical threshold is 7.5% instead of 10%. For AMT purposes, though, the 10% is applied to everyone. So you'd have to add back the difference in the 7.5% and 10%.

It's only a little blurb in the materials but it's an exception.

REG - 81
FAR - 79
AUD - 94
BEC - OCT 15

[needhelpnow]

Thank you! That helps

Just to confirm, had they been below the age of 65, would I add the whole amount below 10% of AGI? Which would mean add back $15k.

[leglock]

@needhelpnow

Unfortunately, the AMT explanation is very poorly written which leads to the same confusion time and again.

To answer your question,no you would not add back the entire 15000 if they were younger than 65. You would add back nothing.

AMT allows medical over 10%, meaning it is not an addback. Addbacks are only deductions you took for regular tax, that are NOT allowed when calculating amt. If you were under 65, you would've have taken a deduction above 10% of agi for medical which is exactly what amt allows, so no addback. If you were over 65, regulat tax allows a deduction above 7.5%; whereas amt only allows a deduction above 10% of agi, so you add back only the disallowed amount which is the spread between 10% and 7.5%

There is a great synopsis by Blackhawk on the reg thread regarding AMT addbacks.

[Anonymous]

leglock explained really well!

[needhelpnow]

thank you! this wouldve messed me up otherwise

[Author]

Replies