Fairmark.com offers a great Tax Guide for Investors read an except about it bleow:
Guide to Alternative Minimum Tax (AMT)
Welcome to our free online guide to the alternative minimum tax, or AMT.
Alternative minimum tax, or AMT, is an additional tax you pay on top of the regular income tax. Originally designed to prevent high-income individuals from using tax shelters and other gimmicks to pay less than their fair share, it now applies to millions of ordinary taxpayers. Broadly speaking they can be divided into three groups:
People with larger than average deductions for personal exemptions and/or state and local taxes. Often there is little they can do to plan around this problem.
People who exercise incentive stock options and decide to hold the shares. Planning is often crucially important for these people. (See our books Consider Your Options for people who receive options and Equity Compensation Strategies for professional advisors.)
People with some unusual item on their tax return, such as a large long-term capital gain.
Pages in this guide are listed below in two categories, first covering AMT in general, and second providing details on the refundable AMT credit, a topic that's generally of interest only to people who paid AMT years ago after exercising incentive stock options and failed to recover all their AMT payment as a credit.
Read more here.
