A Do - It - Yourself Guide: How To Save On Taxes When You Pay Alternative
Minimum Tax (AMT)
WARNING: If you are not a tax professional,
we strongly suggest that you consult a tax professional about using this tax
planning strategy.
Before we begin, here is some "terminology":
- "This year" or "the current year": If today is
6/30/2007, "the current year" or "this year" is 2007.
- "The next year": If today is 6/30/2007, "the next year"
is 2008.
- "The year before" or "last year": If today is 6/30/2007, "the year
before" is 2006.
Lets first make sure that this strategy might work
for you. You need 2 things to make this work. One, this year you
will have to pay Alternative Minimum Tax. Second, in the next year, you
will pay "regular" tax, but no AMT. This sometimes works if you pay less
AMT next year than you will this year. Basically, this works most
frequently for someone who will pay AMT this year, and will have much less income
next year. This strategy can work also for someone who will pay AMT this
year and next year's tax rate will exceed 28%.
Before we continue, lets ask a question that you should be
immediately raising. "If your company sells software to do this, why are
you telling us about an absolutely free alternative?" Simple - Once you
understand how time consuming it is to make these computations without using the
AMT Planner you will want to buy our software.
| |
BY YOURSELF |
AMT Planner |
| Investment |
No money, but lots of your time. |
NO LONGER AVAILABLE |
| Gather Information |
Make sure you have the information to do
tax projections for this year and next year. It
is important to know how much you can reduce this year's state
income tax withholding or estimated tax payments without getting hit with a
penalty. Usually, you want to make sure that this year's state
withholding plus state estimated taxes are as high as your state income tax
was the year before. (Under some situations you might want your state
payments for this year to be 110% of last year's state income tax.) For this reason, this strategy often does not
work if last year's income was higher than this year's income. |
Our program uses the same information,
but the input screens make it easier to gather the information. |
| Process |
- Make a tax projection for this year to see
what your taxes will be without any tax planning.
- Make a tax projection for next year to see
what your taxes will be without any tax planning.
- Combine the tax for this year and next year.
- Make a tax projection for this year reducing
your deduction for state income taxes as much as you can without being
penalized.
- Make a tax projection for next year
increasing your deduction for state income taxes as much as your reduced
them for this year.
- Combine the tax for this year and next year.
- Continue to make tax projections for both years.
Make sure that you change the state income tax deduction between the
amounts that you used in steps 1 and 4. This is a trial and error
situation. Keep making tax projections for both years until you have
minimized the combined taxes for this year and next year.
|
Order, install and run the AMT Planner.
Each time you run our program, it will make 1,000 tax projections for you to
minimize taxes over 2 years. It will take only seconds to run all
1,000 tax projections. |
| Elapsed time |
Hours to get some tax savings. Days
to actually minimize your tax over 2 years. |
A few minutes to minimize your tax over 2
years. |
If you would like us or an accountant near you who uses our
program to make these tax computations for you, please contact us at
1-800-326-6686.
Get more information
about the Alternative Minimum Tax Planner.
|Products|Home|Order|
|Free Software|Support|
|