Know More about Alternative Minimum Tax

If you are liable for the Alternative Minimum Tax (AMT) bracket this year you may not understand how you got there to begin with. Taxes can be confusing so the more you understand it the better the outcome.

If you are living in the New York and looking for ways to decrease your chances of landing in the Alternative Minimum Tax class then you need to decrease your income. You can also pay more into any retirement plan you have. Paying more into a 401K plan will automatically reduce your income and solve the problem.

The Alternative Minimum Tax is a calculation that is always figured with the regular income tax figures. The original purpose of the alternative minimum tax was to prevent tax payers from finding ways to take advantage of tax deductions that includes buying and selling stocks to keep from paying too much in taxes. But today taxpayers do not need a lot of personal deduction in order to be classified in the alternative minimum tax bracket.

The ATM reduces your itemized taxes. Some NYC CPAs would say simply not to claim as many itemized taxes and this would reduce your AMT. However, blindly reducing itemized taxes may increase your overall tax liability. There is a careful balance to determining what to include in itemized deductions and what not to include insuring that your overall tax liability is as low as possible.

Speak to your Certified Public Accountant in New York or NY tax consultant to decide which ways are better for you to reduce your chances of being considered in the Alternative Minimum Tax bracket. Your accountant can give you suggestions on how to get out of it or reduce your chances of getting back in it.

If you have substantial state and local taxes, property taxes, mortgage interest, real estate taxes and non reimbursed business expenses and earn a decent salary you are at a risk for AMT. You may benefit from filing separately on your income tax NY. Not everyone does, but if your New York accountant thinks that it may save you money then you should do it as this will be used in your savings on your federal liability. The AMT does not factor in when determining New York tax liability.

Jonathan Medows, CPA, MBA is the Managing Member of MEDOWS CPA, PLLC, a boutique New York CPA firm serving the needs of individuals, freelancers, self employed individuals & small businesses. To see how he can help you reduce your tax liability and keep you in tax compliance please visit his website:
Medowscpa.com