999 Baker Way Suite 400 San Mateo, CA 94404
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Reduce Amt Tax

Reduce Amt Tax

5 Strategies To Reduce AMT Tax

Alternative minimum tax (also known as AMT tax) was originally designed as a means of keeping the wealthy from wiggling out from under their tax responsibilities. Due to the harsh realities that are associated with inflation, more and more working class citizens are experiencing these excessively punitive taxes and this is a problem that many of us would like to avoid.

Unfortunately, lawmakers are not all that motivated to fix these issues, as these taxes allow for a great deal of revenue to be generated. That is why the onus is placed on the taxpayer to make the right decisions and do everything in their power to avoid these unwanted changes.

To find out more about five of the best strategies when it comes to learning more about how to reduce your AMT tax obligations, please be sure to read on and learn more.

1. Reverse Your Usual Tax Planning

In most instances, we are told that the best possible way to reduce AMT tax is by accelerating all of our deductions and postponing the largest possible amount of income. But when you find yourself at risk of ending up with a tax bill that you do not find desirable, it is time to flip this strategy on its ear. If you have a larger amount of ordinary income (relative to your planned deductions), the less likely you are to incur a painful AMT tax bill.

2. Properly Time Your State Tax Payments

The timing at which you pay these taxes goes a long way towards determining your ability to reduce an AMT tax. The objective here is to make sure that your state tax deductions are matched up with a high end financial year. If you pay your state taxes before the end of the fiscal year, they are able to be deducted from the current year's tax bill and you can avoid the annoyance of AMT.

3. Don't Draw From Gains Without Serious Thought

Let's say that you wish to draw from your long term capital gains. Be sure to run all of the numbers first, so that you can make sure you are not triggering the alternative minimum tax. In many instances, it is often in your best interests to stagger your drawing and take smaller amounts over the course of the next few years.

4. Steer Clear of Private Activity Bonds

These municipal bonds lose their tax free status when they are issued under the typical minimum tax regulations. If you are someone who find themselves worried about the alternative minimum tax or you are actively trying to reduce AMT tax, it is in your best financial interests to ditch these bonds as soon as possible.

5. Exercise Your Stock Options Properly

When it comes to your incentive stock options, you are going to want to exercise them in a very gradual manner over the course of time. You should be exercising them when the gap between the market price and the exercise price is at its most narrow. This allows you to wipe out any issues related to the AMT.

 

Reduce Amt Tax
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(650) 262-6670
999 Baker Way Suite 400, San Mateo, CA 94404

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