Retired people who are living off their savings may have no income. Or what income they have might easily be offset by charitable giving.

Do such people still have to pay some kind of "alternative minimum tax" or does that only apply to people with income?

  • 1
    See the above question - AMT is typically a calculation which supersedes your 'normal' taxes, under the following situations: (1) Your income is higher than a certain threshold; (2) Your total effective tax rate is lower than a certain threshold; and (3) you got that low effective tax rate with some specific deductions that have the potential to be abusive. For example, someone making 200k a year and paying only 10k in tax because of stock option deductions would likely pay AMT. The key is that AMT is ultimately still based off of income, so someone with no (gross) income can have no AMT. – Grade 'Eh' Bacon Feb 6 '17 at 13:48

The money they retrieve from their savings account is not taxed. However, the interest that they earn on those accounts are taxed. When you put money into your savings account from a pay check, it technically has already been taxed.

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  • Generally, sensible people don't keep large amounts of money in savings accounts. The money will be invested, and dividends & profits on sale of appreciated stock will be taxed, just as they would be for a person who also had earned income. If you withdraw part of the principal, that is not taxed (unless it's from a 401k/IRA), because taxes were paid when it was earned. – jamesqf Feb 6 '17 at 0:59

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