What’s the Big Picture When it Comes to AMT Planning?

In the past several articles we have talked about tax planning, and Alternative Minimun Tax planning in particular. Sure, it gets into some details, and sure, taxes are not easy. But let's step back and take a look at the "forest for the trees" and do a little wrap-up.

Here are the key takeaways from the message we have been trying to convey:

Tax planning is something nearly everyone should do. A tax dollar saved is a whole dollar in your pocket. This is much better than earning one more dollar of income, because for each additional dollar of income you earn, you keep only 60-70% after giving the IRS and the state their shares. So that extra dollar of hard-earned income is really worth only 60-70 cents.

You CAN reduce your alternative minimum tax and find the optimal tax solution. Much of AMT planning could be called "low hanging fruit," available for the picking. You don't have to hire expensive attorneys or CPAs and have them do the planning for you.

While taxes can seem complicated or confusing - or both of these - some elements of AMT planning can be very simple. There are many cases where this is true, but for one example….

The control you have over whether you write a check to pay a bill in December, or wait to write it in January, can significantly affect the tax you pay. With the ever-increasing state and local tax burden, as led by California, New York and other already-high-tax states, the AMT savings could potentially reach thousands of dollars.

These Alternative Minimum Tax planning benefits are especially true when we have a major proposed change in the structure of our Federal tax system, as is about to happen if the new administration and Congress have their way.
Remember - you can do this basic planning by yourself. There is no need to pay an adviser.

All you really need is some basic tax software designed to do these types of computations, which is a small investment for potentially large tax savings. One example is software such as that available on AMTIndividual.com. This web site can walk you through everything involved, and it also narrows down the easy choices available to you. You really owe it to yourself to give it a try. Don't wait until next April - it's too late to do anything about 2009 at that point.


George Bauernfeind is with AMT Individual - providing information on alternative Minimum Tax Planning. He writes articles to help the tax payers to pay less Alternative Minimum Tax. He recommend to use Alternative Minimum Tax Calculator to reduce Alternative Minimum Tax.