An interesting thing to note is that Vice President Biden remains stuck in the Alternative Minimum Tax, as he has been for at least the past several years.  As we have been discussing in recent articles, the combination of the AMT exemption phaseout along with his itemized deductions is what ensnares him in the AMT trap.  The VP’s total income was just over $300 thousand, certainly not in the “rich” category by today’s standards for a couple with two incomes.  President Obama, with income in excess of $5 million, didn’t even come close to paying the AMT.

Let’s review what we have been talking about in the last few articles, using the Vice President’s return as a case study.  The reader is encouraged to look at the Bidens’return as we go through this analysis.

AMT exemption phaseout

The VP’s Alternative Minimum Taxable Income (“AMTI”) was $298,013, right in the middle of the AMT exemption phaseout range of $150,000 to $433,800 (see the May 8th article on the AMT exemption).  So instead of getting his full AMT exemption of $70,950, he was limited to an exemption of $33,947.  Was he starting to hear the AMT sucking sound at this point?  You bet he was.

Itemized deductions – state income tax

The Vice President’s state of residence is Delaware, one of the majority of states that has an income tax.  As can be seen in his tax return, he made a total of $17,718 in state tax payments in 2009 through a combination of withholdings from his and his wife’s wages as well as prior year estimated payments.  This amount properly was deducted for Regular Tax purposes, as can be seen on his Schedule A – Itemized Deductions.

As it turned out, however, Biden was significantly overpaid – more than was required to meet his obligation to the state of Delaware.  The overpayment of $4,749 is seen on his Delaware state tax return also shown on the White House web site along with the Federal return.

AMT impact from state income tax overpayment

The $4,749 overpayment by itself resulted in $1,567 in AMT.  Since this means zero in Federal tax benefit because the AMT allows no deduction for taxes, this was a wasted deduction.  Had the VP done some basic AMT planning, he would have been better off paying this in 2010 as part of his 2010 Delaware taxes.

Also, as was discussed in the May 17th article on state income taxes and the AMT, Delaware tax law only requires that 90% of an individual’s income tax needs to be paid in by December 31 in order to avoid a penalty.  Adding this 10% to the actual overpayment means that he paid another $470 in 2009 Alternative Minimum Tax that did not have to be paid.

Note also that the Vice President’s overpayment of Delaware taxes will be an AMT item – this time in his favor – on next year’s 2010 return.  Such refunds are income for Regular Tax purposes but are not for the AMT because of the absence of an AMT benefit having been received in the prior year.

Itemized deductions – property taxes

We cannot tell from the VP’s income tax return when he received his property tax bill or when it was paid, but this is another area of potential AMT savings.  As explained in the May 21st article on property tax planning, a taxpayer’s possible control over paying a property tax bill in December or in January is a factor with direct impact on the amount of Alternative Minimum Tax paid.  Refer to that article for a specific example of how this works.

AMT planning

Will the Vice President ever be able to get completely out of the Alternative Minimum Tax?  While we don’t have the information to know the answer to that question, there certainly are enough opportunities, as discussed above, for him easily to at least reduce the amount of AMT that he is paying.

Conclusion

Even though this Memorial Day weekend officially opens barbecue season, and we now have other summertime distractions like golf, tennis, or just taking some time off for a well-earned vacation, it soon may be too late to adjust state tax withholdings and to make other needed changes if you don’t start giving your 2010 AMT situation a little early thought.

Property tax assessment and billing cycles vary among the states, but the basic concept of your control over paying a tax bill in December or in January – as we previously discussed regarding state income taxes – also applies to property taxes.

Real estate taxes

As an example, here is a sample of an actual property tax bill on a $500,000 residence in a state that assesses the tax in the fall, and then gives the taxpayer a choice of payment dates in accordance with a set schedule.  With this example we can see how easy it is to have a direct impact on the AMT you pay.

The AMT-saving strategy for property taxes is extremely simple here, since you have a choice of paying your property taxes in 2010 or in January, 2011.  The simple act of when you write out the check will have a direct impact on the AMT you will pay.  As mentioned above, you get no benefit from a property tax deduction in a year you are in the AMT.  By paying your property taxes paid in a year you are not in the AMT, you will achieve real tax savings.

In this example, if you are in the AMT this year but do not expect to be in the AMT in 2011, by waiting until January to pay this bill you will save up to 35% in Federal income taxes (39.6% if the “Bush tax cuts” are allowed to expire).  This obviously is much greater than the 2% discount you will forego and the 5% penalty you will incur.

Each individual reader’s state assessment and billing cycle will vary from this example, but the concept is the same – to the extent you can, without incurring penalties with which you would not be comfortable, control even a portion of the timing of payment of your property taxes, you can save on your AMT bill.

Personal property taxes

Many states impose taxes on the value of personal property that is owned.  Common examples are automobiles, boats, RVs and the like.  Similar to real estate taxes, personal property taxes are deductible for the Regular Tax but not for the Alternative Minimum Tax, so here is one more planning opportunity.

Assume your personal property tax rate is 1.5%, for example, and you have a $40,000 car.  Your tax will be $600.  If you have the opportunity to pay this in one year versus another (the December – January example above), this could be an easy way to shave a few hundred dollars off your AMT bill.

Conclusion

Property taxes represent one of the easiest AMT planning opportunities.  It is not hard to take a quick look at last year’s property tax bills to see when they were received and when they are payable.  A little advance planning right now potentially can save thousands in taxes if the AMT is taken into consideration when paying these bills.

If you are stuck in the AMT, you are getting no benefit from your state income taxes paid – they simply are disallowed as a deduction in computing the Alternative Minimum Tax.  But if you could move some of your deductions to a year when you are not in the AMT, you could achieve real tax savings – up to the 35% depending on your tax bracket.

Essentials of state tax payments

There are two essential things to remember in planning your state income tax payments in order to reduce your AMT

One is that no state requires you to pay in 100% of your state tax liability – the required percentage generally is 80% or 90%.  If you don’t pay in this minimum required amount you may be subject to an underpayment penalty, which usually is calculated in a manner similar to interest.

Second is that if you make quarterly estimated tax payments, the fourth quarter payment generally is due on January 15 – for example, January 15, 2011 for the fourth quarter installment of your 2010 taxes.  This is the way the IRS works, and most states follow this pattern.

Control over that last portion of state taxes due

Remembering the above key facts, the AMT-saving strategy is to look at the control you have over the payment of this last portion of your state taxes  – the fourth quarter installment, if applicable, and/or the last 10 or 20 percent you will owe.  Since you have the choice of paying a portion of your state income taxes either in December of the current year, or in January or even April of the following year, the decision on when you write out the check to pay these taxes will have a direct impact on the AMT you will pay.

By having more of your state income taxes paid in a year when you are not in the AMT, you will achieve real tax savings.

An example

To illustrate how this works, assume that you expect to be in the AMT in 2010, that your total 2010 state taxes will be $15,000, and that you expect not be in the AMT in 2011.  If you could defer paying just 10% – $1,500 – of your 2010 state income tax until 2011, this could save you $500 or more depending on your tax bracket. If you could defer $3,000, your savings would be over $1,000, and so on.  Note that even if you do end in the AMT again next year, continuing to execute this strategy will mean that you will achieve this Regular Tax benefit in the first year that you are not in the AMT.  With the Democrats pushing for higher income tax rates, this becomes more and more a real possibility.

What you need to do to evaluate this AMT-saving strategy

Check on your state’s web site to determine the minimum percentage of your taxes that have to be paid in by December 31.  It likely is 80% or 90%.  Also check the rules for estimated payments and the forms that you will need to do this.  Then, using an AMT planning model like that available on amtindividual.com, try putting different numbers in the model for your state tax payments, and you quickly will see how much you might be able to save by reducing your AMT.

Good luck with your planning!

Itemized deductions

The bulk of the AMT problem actually comes from the deduction side – specifically, deductions that an individual is allowed to take in computing the Regular Tax but is not allowed to take for the AMT.  Of the different types of deductions, some are not allowed at all for the AMT, while others are allowed but to a lesser extent than they are allowed for the Regular Tax.

The deductions that are allowed for the Regular Tax but are not allowed at all for the Alternative Minimum Tax are the following:

-          the deduction for state and local taxes

-          miscellaneous itemized deductions

-          the standard deduction

-          the deduction for personal exemptions

The deductions that are allowed for the Regular Tax but are allowed only to a lesser extent for the AMT are these:

-          the itemized deduction for medical and dental expenses

-          the deduction for interest paid

-          many business expenses such as depreciation, depletion, and research expenses, among others

State and local taxes affect more than 90% of all AMT payers

Of the deductions listed above, the single one that impacts almost every individual caught in the AMT trap is the deduction for state and local taxes.  These are relatively large dollar items for most taxpayers, and, as mentioned above, they are not deductible at all for the AMT.

The term “state and local taxes” includes the following:

-  State income taxes.  Forty-three states impose a state income tax, and some of them – New York and California come to mind along with numerous others – have fairly high tax rates for folks who are at the income levels already being affected by the AMT.  (Residents of the following states are the lucky ones who do not share this burden: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.)

-  Local income taxes.  Many cities across the United States impose their own income taxes.  New York City, of course, has one, and other cities across the nation – Louisville, Kentucky is one other example – also have them.  New York City’s tax rate ranges from 2.9% to 3.6% of taxable income, while Louisville’s is 2.2% on gross earned income – no deductions allowed.  Taxes like these quickly compound the AMT problem.

-  Real estate taxes.  Owners of real estate pay property taxes on the value of the property (an “ad valorem” tax).  Many states – you know if you live in one – have high property taxes.  Again, a big AMT problem.

-  Personal property taxes.  It is not uncommon for states and local jurisdictions to impose a property tax on personal property.  “Personal” is a legal term meaning tangible but moveable property such as cars and boats.  Check the tag renewal notice on your car, for example, to see how much this is.

-  Sales taxes.  All states but six impose a sales tax.  On the Federal return the taxpayer has an option to deduct state and local sales taxes in lieu of income taxes.  In the seven states with no income tax this election generally proves beneficial in computing the Regular Tax – but of course it is no help when it comes to the AMT.

In the next article we’ll look at the effect these lost itemized deductions have on calculation of the AMT, and we also will review the significant tax planning opportunities that they present.

# 1 – Personal exemptions

For the Regular Tax, every taxpayer is entitled to a personal exemption deduction for himself, and his spouse and/or other dependents.  Since the AMT denies any deduction for personal exemptions, this is the single item affecting almost every individual paying the Alternative Minimum Tax.

# 2 – State and local tax deduction

This item, which consists of property taxes, state and local income taxes, and sales taxes, is only slightly behind personal exemptions in terms of the number of AMT payers affected.  The reasons for this are the relatively heavy burden of state and local taxes as well as the fact that the AMT disallows every dollar of this deduction.

# 3 -Capital gains

This is not specifically listed as an AMT item, but the impact of capital gains on an individual’s Alternative Minimum Tax can be significant.  At levels of taxable income where most AMT payers find themselves, an additional $100 of capital gains could add up to $7 of AMT being paid on top of the $15 imposed by the Regular Tax capital gains bracket.

# 4 – Miscellaneous Itemized Deductions

A taxpayer’s employee business or investment-related expenses may be deductible under the Regular Tax, but they are not for the AMT.  This affects nearly a third of all AMT payers.

# 5 – Depreciation

Business owners and investors with rental property are allowed depreciation deductions for the property used in these activities.  The AMT disallows a portion of the depreciation deduction that otherwise may be taken.

# 6 – Passive activity losses

Many investment activities are considered “passive” for tax purposes.  An example is a taxpayer who acquires an interest in an investment partnership.  As such, losses from these investments are limited in how they may be deducted for purposes of the Regular Tax.  The AMT imposes even further limitations on the use of these losses.

# 7 – Private activity bond interest

An individual investing in tax-exempt municipal bonds may receive an unpleasant surprise when he discovers that Alternative Minimum Tax has to be paid on the interest income from a certain type of municipal bond – the so-called private activity bond.  While there may be an increase in before-tax yield from this type of bond, the after-AMT results can be very disappointing.

# 8 – Standard deduction

A taxpayer is allowed no standard deduction in computing the AMT. A valuable planning idea here could mean that an AMT taxpayer might be better off not claiming the standard deduction at all.

# 9 – Medical and dental expenses

For purposes of the Regular Tax, individuals are allowed a deduction for medical and dental expenses, to the extent these expenses exceed 7.5% of Adjusted Gross Income.  The AMT limits this deduction even further by instead imposing an excess-of-10% requirement.

#10 – Limitations on investment losses

In addition to the limitation on the use of passive activity losses as discussed above, there are other investment activities, not falling under the passive rules, the losses from which still will be limited for purposes of the Regular Tax.  Again, the AMT places even further limitations on the use of these losses.

Conclusion

In addition to this top ten list, there are nearly 20 other individual items waiting to trip up the AMT payer.  The individual items that catch any particular taxpayer are shown on that individual’s Form 6251 that is attached to his tax return.  It is important to note, however, that planning opportunities exist that can lessen the impact of each and every one of these.  Check these out at AMTIndividual.com.

In our 10-week series of articles on tax planning for the Alternative Minimum Tax, we have looked at many things a taxpayer can do to reduce his AMT liability. With only four days left in which to act in order to reduce 2009’s taxes, here is a summary of these items, with reference to the date each article appeared on amtblog.com. Please refer back to the article for the specific tax-saving steps that still may be taken before year end.

State and local taxes

This item affects 94% of all AMT payers, yet it is one of the easiest to plan for and it can have the most direct impact on a taxpayer’s Alternative Minimum Tax. There are three types of taxes here:

1. Property taxes – by weighing the relative factors of property tax burden, percentage of AMT payers, and size of population, here is a ranking of the top 10 states that are hit the hardest by this item. Residents of these states really do need to focus on this one in particular. See the November 8th article posted on amtblog.com, “Property Taxes.”

#1 – New York
#2 – New Jersey
#3 – California
#4 – Illinois
#5 – Massachusetts
#6 – Connecticut
#7 – Maryland
#8 – Pennsylvania
#9 – Virginia
#10 – Ohio

2. Income taxes – the tax dollars here are larger, on a per-taxpayer basis, than property taxes. While the AMT planning takes a little more work than property taxes, the potential savings still are there. See the amtblog.com article posted on November 2nd, “State Income Taxes.”

3. Sales tax on new cars – this is easy money for those who bought a new car this year, or still are contemplating buying one. See the amtblog.com article posted on November 11th, “Sales Tax on New Cars.”

Stock options, in particular Incentive Stock Options (ISOs)

A large number of corporate employees, generally ranging from the mid-management level up to the “C Suite” folks, have stock options granted to them by their employers. If these options are ISOs, AMT planning is critical because of the major impact the exercise of these options can have on an individual’s Alternative Minimum Tax. Our two-part series of articles appearing on amtblog.com on December 3rd and December 6th, “Incentive Stock Options – Parts 1 and 2,” go through the basic steps in determining whether a taxpayer does in fact have an ISO – often confused with the other types of stock options and equity grants an employer may offer – and then explains how these ISO exercises trigger the AMT. This is a very important read for all those who either have exercised stock options or are contemplating exercising stock options.

Capital gains

The impact of capital gains on a taxpayer’s Alternative Minimum Tax can be a real surprise – and, unfortunately, not a pleasant surprise At first blush capital gains appear to be AMT-neutral, but this is far from the case. The December 13th article on amtblog.com, “Investments – Capital Gains,” explains this issue. To the extent a taxpayer has recognized capital gains in 2009, and/or “harvested” capital losses to offset capital gains, there can be a direct AMT impact. Any capital gain or loss activity between now and December 31 also will have this impact.

Summary

It is not too late to take action on any of the above items for 2009, but time is short. Once the ball drops in Times Square, you’ll be planning for 2010!

The AMT adjustment for State Income Tax Refunds, line 8 on Form 6251, is a reduction to your Alternative Minimum Taxable income. There isn’t much a taxpayer can do about this other than to understand just a little bit of what is going on.

Just for fun, let’s start with the IRS’ explanation for this in the instructions to Form 6251:

“Include any refund from Form 1040 line 10, that is attributable to state or local income taxes.  Also include any refunds received in 2009 and included in income on Form 1040, line 21, that are attributable to state or local personal property taxes or general sales taxes, foreign income taxes, or state, local, or foreign real property taxes. Enter the total as a negative amount.  If you include an amount from Form 1040, line 21, you must enter a description and the amount next to the entry space for line 8.  For example, if you include a refund of real property taxes, enter “real property” and the amount next to the entry space.”

What does this mean in “plain English?”  The answer is best done with an example:

Assume a couple paid $5,000 in state income taxes in 2008 and itemized this deduction (Schedule A), which they were allowed to do.  But the state income tax return filed showed they had overpaid by $500.  This $500 refund was received from the state in April, 2009.

For Regular Tax purposes, the $500 is reported as income in 2009.  This is because of the tax principle that if an allowable deduction for some expense is taken in one year (e.g., 2008), but that expense is refunded in the following year, instead of amending the 2008 return to “correct” the deduction, the proper tax fix is to reverse the deduction in 2009 by reporting it as income.  Note in total it actually was only a $4,500 expense, which is the deduction of $5,000 less the refund of $500.

For AMT purposes, both income (the refund) and deductions need to be shown on an apples-to-apples basis. Because there is no deduction of the $5,000 state taxes for those in the AMT, any related refund amount, Tax Refunds, line 8, does not require a recovery of that item in income like you see in the Regular Tax. The $500 is deducted from Alternative Minimum Tax income in 2009, effectively netting any impact, income or deduction, to zero.

If you still are thinking about buying a new car but haven’t done it yet, you’d better start visiting showrooms soon. The new tax law allowing a one-time deduction for sales tax paid on a new vehicle will expire in just 6 weeks; after December 31st it’s too late. New car models currently are arriving in dealer showrooms, so whether you end up negotiating a good price on a leftover 2009, or are one of the first in your neighborhood to own a 2010, it makes no difference – both of them qualify.

Under the stimulus bill enacted last February, this tax benefit is separate and distinct from the “cash for clunkers” program; in fact, you can take advantage of both so long as you qualify under each program’s requirements.

The extra good news for AMT payers is that, unlike the rule for general sales taxes, and for state income taxes and property taxes that we already have told you about, this new-car sales tax break is available even if you are stuck in the Alternative Minimum Tax!

A quick summary of the rules:
- State and local sales taxes paid on up to $49,500 of the purchase price of qualifying vehicles are deductible.
- In a state that does not have a sales tax – such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon – other fees or taxes are deductible so long as they are assessed on the purchase of the vehicle and are based on the vehicle’s sales price or as a per unit fee.
- Qualified motor vehicles include new – not used – cars, light trucks, motor homes and motorcycles.
- Purchases must have occurred after February 16, 2009, and before January 1, 2010.
- The deduction can be taken regardless of whether or not you itemize your deductions on your tax return – i.e., even if you take the standard deduction you are still eligible for this one.
- The deduction is claimed on your 2009 Federal income tax return, not on your 2008 as can be the case with certain casualty losses.
- The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.

If you already have bought a car that qualifies, you need to go and figure out how much this new benefit will save you if you haven’t done so already.
If you’re still wavering over whether to do it or not, you need to calculate the tax savings you will get – up to 28% of the sales tax paid even if you are in the AMT, and then figure this in to what you can afford. Maybe this will help you make the decision!

George Bauernfeind is with AMTIndividual.com, providing analysis, customized strategies, and an online dual tax calculator / planner to help you reduce your Alternative Minimum Tax.

Real estate taxes

Similar to state income taxes, for Regular Tax purposes you are allowed a deduction for property taxes that you pay.  Under the AMT, however, you are allowed no deduction for property taxes.  This problem affects 94 percent of all folks stuck in the Alternative Minimum Tax, so it is something that you definitely need to look at.  This also represents one of the easiest AMT planning opportunities.

Property tax assessment and billing cycles vary among the states, but the basic concept of your control over paying a tax bill in December or in January – as we previously discussed regarding state income taxes – also applies to property taxes.

As an example, here is a sample of an actual property tax bill you would have on a $500,000 residence in a state that assesses the tax in the fall, and then gives the taxpayer a choice of payment dates in accordance with a set schedule.  With this example we can see how easy it is to have a direct impact on the AMT you pay.

The AMT-saving strategy for property taxes is extremely simple here, since you have a choice of paying your property taxes in 2009 or in January, 2010.  The simple act of when you write out the check will have a direct impact on the AMT you will pay.  As mentioned above, you get no benefit from a property tax deduction in a year you are in the AMT.  By paying your property taxes paid in a year you are not in the AMT, you will achieve real tax savings.

In this example, if you are in the AMT this year but do not expect to be in the AMT in 2010, by waiting until January to pay this bill you will save up to 35% in Federal income taxes.  This obviously is much great than the 2% discount you will forego and the 5% penalty you will incur.

Your particular state’s assessment and billing cycle likely will vary from this example, but the concept is the same – to the extent you can, without incurring penalties with which you would not be comfortable, control even a portion of the timing of payment of your property taxes, you can save on your AMT bill.

Personal property taxes

Many states impose taxes on the value of personal property that you own.  Common examples are automobiles, boats, RVs and the like.  Like real estate taxes, personal property taxes are deductible for the Regular Tax but not for the Alternative Minimum Tax, so here is one more, although smaller, planning opportunity.

Assume your personal property tax rate is 1.5%, for example, and you have a $40,000 car.  Your tax will be $600.  If you have the opportunity to pay this in one year versus another (the December – January example above), this could be an easy way to shave a few hundred dollars off your AMT bill.

George Bauernfeind is with AMTIndividual.com, providing analysis, customized strategies, and an online dual tax calculator / planner to help you reduce your Alternative Minimum Tax.

State Income Taxes

For Regular Tax purposes – that is, if you are not in the Alternative Minimum Tax – you are allowed a deduction for state income taxes that you pay. Under the AMT, however, you are allowed no deduction for state income taxes. This problem affects 94 percent of all folks stuck in the Alternative Minimum Tax, so it is something that you definitely need to look at. This also represents one of the best AMT planning opportunities.

Every state with an income tax requires that you pay the tax throughout the year. You can do this either through withholding from your paycheck if you are an employee, or through quarterly estimated payments if you are self-employed, retired, or have not adjusted your withholding to cover the taxes you’ll owe on your investment income.

Two key points:

1 – No state requires you to pay in 100% of your state tax liability – the required percentage generally is 80% or 90%. If you don’t pay in this required amount you may be subject to an underpayment penalty, which usually is calculated in a manner similar to interest.

2 – If you make quarterly estimated tax payments, the fourth quarter payment is generally due on January 15 – for example, January 15, 2010 for the fourth quarter installment of your 2009 taxes. This is the way the IRS works, and most states follow this pattern.

How to do this simple tax planning:

The AMT-saving strategy here is to focus on the control you have over the payment of this last amount - the fourth quarter installment, if applicable, and/or the last 10 or 20 percent you will owe. Assuming you have a choice of paying a portion of your state income taxes in December or in January, the simple act of when you write out the check will have a direct impact on the AMT you’ll pay. As mentioned above, you get no benefit from a state income tax deduction in a year you are in the AMT. By getting more of your state income taxes paid in a year you are not in the AMT, you will achieve real tax savings.

Example:

State Income Taxes

Assume that you are in the AMT in 2009, your total 2009 state taxes are $15,000, you will not be in the AMT in 2010, and your Regular Tax bracket is 35%. If you could defer paying $1,500 of your 2009 state income tax until January, this would save you over $500. If you could defer $3,000, your savings would be over $1,000. Note that even if you end in the AMT again next year, continuing to execute this strategy will mean that you will achieve this Regular Tax benefit in the first year that you are not in the AMT.

If you are certain that you will not be in the AMT next year, consideration might be given to delaying payment of more than the allowable percentage, even if it means incurring an underpayment penalty. Many states have underpayment rates around 6%; this small penalty obviously is less than a Federal tax savings of up to 35%.

What you’ll need:

If you do decide to pursue a state income tax strategy, you’ll first need to check the rules for making estimated payments for the state in which you live. All states have the forms you’ll need, available on their web sites. The three key forms are the state equivalent of the following IRS forms:

• Form W-4, Employee’s Withholding Allowance Certificate – This can be filed at any time with your employer to adjust your withholding up or down.

• Form 1040-ES, Estimated Tax for Individuals – This is used to make quarterly estimated tax payments if you are self-employed or retired, or if you have not adjusted your withholding for the additional taxes due on your investment income.

• Form 2210, Underpayment of Estimated Tax by Individuals – This is used to determine whether you have paid in the required percentage. By reading the instructions you will see what your state’s required minimum pay-in percentage is.

Conclusion:

State income taxes affect nearly everyone and are one of the best AMT planning opportunities. Applying what you learned above will provide a cash and tax benefit. You control this one and can do it without the need of a professional adviser.

If you want additional assistance and links to your State’s forms, plus a dual tax calculator to determine the exact benefit, please visit AMTIndividual.com.