Alternative Minimum Tax Planner

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If you are going to be hit with the Alternative Minimum Tax this year and not next year, you most likely can save on next year's taxes!  You can often do this by paying less in state income tax this year and paying more in state income tax next year.   The real question is how much state income tax should you pay this year.  If you want to learn more about this strategy call Dave Kaufmann, CPA at 1-800-326-6686. 

Use the Alternative Minimum Tax (AMT) Planner to reduce taxes over two years.  This program will instantly show you how to get the maximum savings from this strategy.  See how this planning opportunity can reduce taxes.


Contents

Current Version
System Requirements
Price
Overview
Limitations

 

Overview

Alternative Minimum Tax -- A Second Tax Computation

Alternative Minimum Tax (AMT) was designed to catch those few that had very high income, but paid no income tax. Unfortunately, the Alternative Minimum Tax is trapping many "normal" taxpayers.

The Alternative Minimum Tax and Regular Income Tax computations are two different, but related, computations. The highest tax rate for the AMT is lower than the highest tax rate for Regular Income Tax. However, there are fewer deductions for the Alternative Minimum Tax. Thus, when AMT applies, the AMT taxable income, less exemptions, is usually larger than the Regular Tax taxable income.

Some items that can reduce Regular Income Tax, but do not reduce Alternative Minimum Tax are:

  • Various "timing" deductions,
  • Personal Exemptions,
  • Medical Deductions (limited for Regular Tax, but more limited for AMT),
  • Itemized Deductions for State and Local Taxes,
  • Certain types of mortgage interest, and
  • Itemized Miscellaneous deductions.

For example, if you paid a very large amount of state income tax, that could lower Regular U.S. Income Tax without lowering Alternative Minimum Tax. The result could easily be that you will pay AMT when you were planning to pay no tax.

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Alternative Minimum Tax Planning

When  permanent adjustments (like Itemized State Income Taxes)  are the source of the AMT, there is a planning strategy that is frequently available.

With traditional tax planning, the taxpayer often moves deductions from next year to this year and moves income from this year to next year. That traditional tax planning sometimes triggers Alternative Minimum Tax!  You want to do the opposite.

A POSSIBLE SOLUTION:

If you will pay AMT this year but not next year, consider moving your Itemized State Income Tax deduction to next year!  That way you save for next year the deduction that you will lose this year.

The best way to illustrate this strategy is with an example.  By deferring about $10,000 in state income tax withholding from this year to next year you save about $1,100.  See our example.

You can see, using the Alternative Minimum Tax Planner, whether deferring state income tax payments/withholding can save on U.S. taxes.  Simply looking at the program's printouts will give you an idea how much you will save and how much state income tax to postpone to next year.

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How To Make This Analysis Yourself

Current Version

Most current version: AMTI2009.10
Release Date: 12/3/2008

Requirements

Microsoft Windows.

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Price

$149 (+$7 Handling)

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Limitations:

The program can compute the maximum benefit for reducing state income tax payments.  The program can also determine the level of state tax payments or withholding that results in the minimum amount of U.S. tax. The program does not determine your penalty free level of estimated or withheld state income taxes.  This amount is typically equal to last year's state income tax.  However, there may some instances where you should pay in more than last year's state tax.

The Alternative Minimum Tax Calculator does not have a separate input for state income tax refunds which are not income for AMT purposes.

The program uses the current year's tax rates and tax computation for the next year's computations.  This is because tax rates and phase out amount are known for the current year, but not the next year.

We strongly advise that tax professionals do this computation.

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DEMO

Download the demo, (currently being revised, for this program.

Sample Reports

See sample report.

Manual

Download the complete manual in Acrobat PDF format.

Let DTS Do The Computations For You

Contact DTS to have us make these computations for us for you. You can  call us at 1-800-326-6686.


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PO Box 632285, Littleton, CO 80163-2285
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