The tax law gives preferential treatment to some kinds of income and allows special deductions and credits for some kinds of expenses. Taxpayers who benefit from these provisions of the law may have to pay an addition tax called Alternative Minimum Tax (AMT). It is a separate tax computation that, in effect, eliminates many deductions and credits and creates a tax liability for an individual who would otherwise pay little or no tax. In other words, it is a tax paid over and above the regular tax. It usually affects a small but increasing percentage of taxpayers but if it applies the cost can be considerable.

It is very difficult to answer this question, mainly because of the complicated nature of this tax. Sometimes, one big item or a blend of many small items can contribute to your AMT liability.  The amount also depends on your filing status. You may have to pay AMT if your taxable income for regular tax purposes, combined with certain adjustment and tax preference items is more than the exemption amounts given below:

• $58,000 if you are married filing a joint return or a qualified widow(er),
• $40,250 if you are single or head of household, or
• $29,000 if you are married filing a separate return.

The adjustments and tax preference items include such things as: standard or certain itemized deductions, taxable state and local tax refunds, accelerated depreciation of certain property, intangible drilling costs, certain tax exempt interest and the difference between AMT and regular tax gain or loss on the sale of property, treatment of incentive stock options and depletion allowances.
If you meet the criteria noted above and have several of the listed tax preference items, you should determine whether you might be liable for AMT.
For more details, see  the instructions for line 42 of Form 1040, U.S. Individual Income Tax Return, as well as Form 6251, Alternative Minimum Tax—Individuals, and its instructions.

Because some taxpayers — particularly wealthy taxpayers — have been so successful in their efforts to legally minimize their tax bills, Congress came up with another way to tax them: the alternative minimum tax (AMT).

The AMT provides a formula for computing tax that ignores certain preferential tax treatments and deductions that taxpayers would otherwise be entitled to claim. So, many taxpayers are required to compute their income tax liability twice: once under the regular method and once again under the AMT method.

An individual will be subject to the AMT if his or her AMT liability is more than the regular tax liability for the year.

The most common items that can cause you to become subject to the AMT are listed below. These items must be added back to your taxable income in order to compute your AMT:

1. All personal exemptions.
2. The standard deduction, if you claimed it.
3. Itemized deductions for state and local income taxes, and real estate taxes.
4. Itemized deductions for home equity loan interest (this does not include interest on a loan to buy, build, or improve your home).
5. Itemized deductions for miscellaneous deductions.
6. Itemized deductions for any portion of medical expenses that exceed 7.5 percent of AGI, but not 10 percent of AGI.
7. Deductions you claimed for accelerated depreciation that exceed what you could have claimed under straight-line depreciation.
8. Differences between gain or loss on the sale of property for AMT purposes and for regular tax purposes; these differences most commonly occur as a result of the different depreciation methods required under AMT, as described above.
9. Addition of certain income from incentive stock options.
10. Changes in income from installment sales, since the installment sale method generally can't be used for AMT purposes.
11. Changes in certain passive activity loss deductions.
12. Deductions relating to oil and gas investments, drilling or mining operations.
13. Interest on certain private activity bonds that would otherwise be tax-exempt.