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Financial Planning / Tax Strategies
|Subject: Re: AMT Deductions||Date: 11/3/2001 1:33 PM|
|Author: ptheland||Number: 54988 of 122648|
This will be an ugly year for taxes - our consulting business did well, and we are selling rental property and land held for investment. I´ve done my best to estimate our tax burden (yes, I´ll check all this with our tax advisor) but I´m worried about the AMT. One way I could increase our meager deductions is by prepaying state taxes but the AMT rules might disallow that.
Unless you are talking about a capital gain that's quite large in relation to your other income, I don't see anything that would be an AMT trigger in the information you've given. Except, of course, for the state taxes.
In my experience, you'd have to pay a lot of state taxes to trigger AMT just with that alone. Most often it comes in the year after a big spike in income because the state taxes were NOT prepaid. That kicks the state taxes way up in relation to the following year's income and triggers the AMT.
My best guess is that you'll want to prepay enough of the state taxes to get to the point where AMT kicks in. That's because any state taxes that provide no benefit because of the AMT cannot be carried forward to the next year.
It's a little difficult to do (unless your crystal ball is better than mine), but I'd suggest looking at a TWO year tax projection. Make your best guess for next year's income and then look at your taxes over the two years depending on when you pay the state taxes. Juggle the state taxes paid this year and next year to see where you get the best result.
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