I posted a while ago questioning why I was subject to the Alternative Minimum Tax last year when my situation did not involve any of the items that the tax was designed to address (I just had wages and pretty normal deductions). The consensus was that I live in an area with high local taxes (California). That leads me to this question: Should I pay next year's property taxes early to get the deduction this year or will that create more AMT issues? I have a very high wage income this year due to leaving my prior job and setting up my own firm. Next year will undoubtedly be less lucrative (by about a mile or more). I have the idea that I should accelerate necessary deductible expenses this year to shield as much as I can because next year I will likely not need to shield as much. Any thoughts appreciated.
Should I pay next year's property taxes early to get the deduction this year or will that create more AMT issues? Hard to say. If you've projected that you will be paying AMT again this year, then you would get no benefit from the property tax payment and prepaying it would not make sense.Alternatively, if AMT is not a problem this year, then paying the tax a bit early could be a good move, especially if you expect to be in a lower tax bracket next year.--Peter
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