Hi, I’m Tom Lo with Vested Financial Planning. I’m here to help you understand what AMT is.
AMT is Alternative Minimum Tax and the way I help clients understand AMT is that you can think of it as a parallel tax calculation. Every time you do your taxes, it gets calculated ordinary income, and also with AMT, whichever one is higher is the one you end up paying.
The key thing to understand about AMT is it treats different types of income differently. In particular ISO income, you get taxed for AMT, but you don’t for ordinary income. That’s why it’s important if you exercise ISOs, you often end up paying AMT.
So if you want to learn more, come to my website at vestedfinancialplanning.com. Thank you very much.