2 Strategies to Reduce AMT Shocks - Part I

Q. What can I do to reduce my AMT shocks?

A. If you want to reduce AMT shock, you need to be clear on the AMT triggers.  Below is an incomplete list:

• Incentive stock options, and large capital gains
• Large numbers of personal exemptions
• Large amounts of state and local taxes paid
• Large amounts of miscellaneous itemized deductions
• Large deductible medical expenses

Below is a list of common adjustments for AMT:

• The medical expense deduction is computed using a 10% of AGI
• No deduction is allowed for personal state and local income and real estate taxes, and miscellaneous deductions subject to the 2% of AGI
• No deduction is allowed for personal exemptions and the standard deduction
• No deduction for home mortgage interest unless loan is used to buy, build or improve taxpayer’s principal or second home

In our next blog post, we will discuss two practical strategies to reduce AMT shocks.