Taxpayers who take advantage of certain tax breaks may be subject to the alternative minimum tax (AMT). The AMT was designed to ensure that high-income individuals pay a minimum amount of tax, regardless of the deductions, credits or exemptions they might claim if they weren’t subject to the AMT. Basically, your income tax is calculated two ways and you must pay the higher of your regular tax or the AMT. There may be planning opportunities to reduce your chances of owing the AMT. For example, you may be able to reduce your taxable income by deferring income to next year, maximizing retirement contributions or avoiding capital gains. Contact us for strategies that apply to your situation.
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