Taxation: AMT, Self-Employment Tax and Other Taxes

The taxes added on top of regular income tax: alternative minimum tax, self-employment tax, Additional Medicare Tax, the net investment income tax, household employment taxes and the estimated tax penalty, plus clergy, military and decedent rules. The SEE pairs short computations with threshold recall, and most figures are 2025 amounts from Rev. Proc. 2024-40 or fixed statutory thresholds.

Taxation6 min read7 sections

Must-know for the exam

2025 AMT exemption: $88,100 single, $137,000 MFJ, $68,500 MFS, reduced 25% of AMTI over $626,350 single or $1,252,700 MFJ (IRC 55(d); Rev. Proc. 2024-40 sec. 3.11).
AMT rates are 26% and 28%; 28% starts above $239,100 of AMTI after the exemption ($119,550 MFS) for 2025 (IRC 55(b)(1); Rev. Proc. 2024-40 sec. 3.11).
Only AMT from deferral items, such as an ISO spread, creates a minimum tax credit on Form 8801; exclusion items like the SALT add-back do not (IRC 53(d)).
SE tax is 15.3% of 92.35% of net profit; the 12.4% part stops at the $176,100 wage base for 2025, counting wages first (IRC 1401, 1402(b)).
Additional Medicare Tax is 0.9% over $200,000 single or $250,000 MFJ; employers withhold on wages over $200,000 regardless of status (IRC 3101(b)(2), 3102(f)).
NIIT is 3.8% of the smaller of net investment income or MAGI over $200,000 single, $250,000 MFJ or $125,000 MFS; thresholds are not indexed (IRC 1411).
Household employee: Social Security and Medicare on cash wages of $2,800 or more in 2025; FUTA if $1,000 in any quarter (IRC 3121(a)(7)(B), 3306(a)(3); Schedule H instructions (2025)).
Estimated tax safe harbor: pay the smaller of 90% of 2025 tax or 100% of 2024 tax (110% if 2024 AGI exceeded $150,000) (IRC 6654(d)).
A minister's housing allowance is excluded from income tax but included in net earnings for SE tax unless Form 4361 is approved (IRC 107, 1402(a)(8)).
Income in respect of a decedent keeps its character, gets no basis step-up and is taxed to the recipient, with a 691(c) deduction for estate tax (IRC 691; Pub. 559 (2025)).

On this page · 7 sections

Traps that cost marks

Using the 2024 figure or the married-filing-separately amount.
Adding back every itemized deduction for AMT.
Assuming all prior AMT creates a credit.
Treating IRA distributions as investment income for the NIIT.
Assuming withholding follows the joint $250,000 threshold.
Claiming a single employer's over-withholding as a credit.
Excluding the housing allowance from self-employment tax too.
Thinking the exemption can be elected at any time.

Why it matters on the exam

Part 1 Domain 4 covers taxes other than the basic rate schedule. Questions are usually a single computation with one threshold: SE tax with wages over the base, NIIT on a capped excess, the AMT exemption phase-out, or the estimated tax safe harbor. Learn which thresholds are indexed (AMT, wage base) and which are fixed in the statute (NIIT, Additional Medicare Tax).

Note that the 2025 Social Security wage base of $176,100 drives both SE tax and the excess Social Security withholding credit.

Alternative minimum tax

Start with taxable income — Add back the standard deduction and SALT, which are not allowed for AMT.
Add adjustments and preferences — ISO spread on exercise, private activity bond interest (except 2009-2010 bonds).
Subtract the exemption — $88,100 single, reduced by 25% of AMTI over $626,350.
Apply 26% / 28% — Capital gains and qualified dividends keep their lower rates.
Compare — AMT is the excess of tentative minimum tax over regular tax.

Form 6251 instructions (2025); Rev. Proc. 2024-40 sec. 3.11.

Premium

Every note. Every question. One pass.

5 more sections of this note are part of Premium.

Every section of every study note
750+ original questions across every outline topic
Full timed practice exams
A worked explanation on every question
Your full mistake bank and weak-area review

Unlock with Premium

From about US$12.42/mo on the Until-you-pass pass (12 months)

Exam-style questions

← Previous note: Tax Credits All study notes

← All study notes

Taxation