Tax Tips on Dealing with the Alternative Minimum Tax (AMT) - information from Brookwood Tax Service

This page last updated on
August 5, 2005

Will You Be Hit With Alternative Minimum Tax?
Tax tips to avoid an unexpected trap

Each year, more and more middle-income taxpayers are hit with alternative minimum tax (AMT). Although it wasn’t the intent of lawmakers, average taxpayers are falling into the AMT trap at a rapidly increasing rate.

To reduce the possibility of being affected by the AMT, you may want to consider timing your income and deductions, deferring certain items to a future year, and accelerating others into the current year. As a general rule, it’s best to accelerate items of income into AMT years and postpone deductions into non-AMT years, because the AMT tax rates are generally lower than the regular tax rates for high-income taxpayers.

Depending on your exposure to the AMT in 2005, some possible tax planning strategies include:

	Delaying payment of certain items, such as state and local income taxes, property taxes, medical expenses, and miscellaneous expenses (provided this does not impair your credit status or business standing or cause you to incur late charges);
	Postponing charitable contributions;
	Avoiding the exercise of incentive stock options;
	If large long-term capital gains will affect your AMT, delaying the asset sale until after year-end or spreading the gain over a number of years by using an installment sale; and
	Making use of any AMT credit from prior years, if applicable.

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Will You Be Hit With Alternative Minimum Tax? Tax tips to avoid an unexpected trap

Will You Be Hit With Alternative Minimum Tax?
Tax tips to avoid an unexpected trap