What does Net Taxable income, less: exempt income mean?
For the first time ever i filed a tax return.
I only made $16,000 as a delivery driver.
I used turbo tax and on my earnings page i see a box that says Alternative minimum taxable income in the amount of $10,753 which is my net income after my deductions.
But in another box right below that i see "Less: exempt income" in the amount of $71,700.00
What is that? Does that mean the irs thinks i earned more money? Or that someone stole my identity? Here is a pic of that.
- Coffee DrinkerLv 71 month ago
Nothing to worry about here, nobody stole your ID and no, Turbo tax is not saying they think you earned $71,000.
The US tax code has so many deductions and credits that sometimes a person with a really high income can end up with a really low tax rate to the point that it just seems unfair (like someone earning $1 million and paying only 2% in taxes).
So politicians created something called the "alternative minimum tax" (AMT) - its exactly what it sounds like. Its alternative way of calculating the minimum amount of tax that someone must pay. Its designed to "catch" people with really high incomes that have so many deductions that they end up paying ridiculously low tax rates.
On this screen Turbo Tax is calculating your AMT amount. Your income was $10,753
you automatically get an exemption of $71,700. The exemption is like a standard deduction meaning you won't pay any tax on that amount, and could only owe the AMT tax if you earned more than that exemption.
So Turbo tax is just calculating the fact that your income was below the AMT exemption, leaving you with a taxable income (for AMT purposes) of $0, which of course means an AMT tax of $0 - which is exactly correct since your income is nowhere near the high income levels that the AMT is meant for. It would be simpler if they just said "congratulations, the AMT does not apply to your situation, therefore you will not owe additional taxes, lets move on"
- StephenWeinsteinLv 72 months ago
No, it does not mean any of those things.
"Less: exempt" means the amount that wouldn't be subject to the alternative minimum tax even if you did earn it. This does not mean anything about what you did earn or about what anyone else earned with your identity or any other identity. It is just telling you how much you could have earned without any of it being subject to alternative minimum income tax.