Retirement & Financial Planning Report

Suppose you prepare your federal income tax return and come up with an obligation of $40,000. Then you go through the AMT calculation and see that you’d owe $35,000, by that method. You’d pay the $40,000 regular tax. On the other hand, if you have a $50,000 regular tax obligation and a $60,000 AMT you’d pay the $60,000 AMT bill: the IRS always wins in this game.

You are most likely to run into to the AMT if you live in an area where you pay large amounts of state and local income tax as well as property tax in relation to your income. Sizable miscellaneous itemized deductions also may put you into the AMT and so can large amounts of capital gains.


Some planning tactics may help you to contend with the AMT. Again, talk to your tax preparer regularly about your finances so you can drop your tax bill to (but not below) the AMT “crossover point.”