alternative minimum tax (AMT)

Most Confusing Parts Of The Income Tax Code, Part 2: Alternative Minimum Tax

Many provisions of the Internal Revenue Code are complicated. Proper interpretation of the rules and regulations contained in these provisions requires the assistance of an experienced and knowledgeable tax professional. The second part of our series about the most confusing provisions of the Internal Revenue Code addresses everyone’s favorite, the alternative minimum tax.

Why Is It Confusing?

  • The AMT doesn’t seem to achieve its purpose
  • Taxpayers have to compute two taxes
  • The computation of the AMT itself is enormously long and complicated

Start Your Year-End Tax Saving Moves Now – Here’s How Part 2

It’s already fall and before you know it, another year wil be upon us. It’s never too early to plan ahead to minimze your tax bill. An experienced and knowledgeable tax professional can help any individual or business make the right year-end savings moves with important advice and assistance. Here is the second part of a two-part series on some things to ponder when considering potential tax moves between now and the end of 2016:

  1. Accelerate deductions

Deduction Thresholds And Bunching Expenses

All of us as taxpayers continually think we have a lot of expenses that we can itemize and deduct to help reduce our respective tax bills. But they come, they go, all for naught and no effect. The problem usually arises from the fact that our costs regularly fall just short of the required income thresholds for some categories of deductions. One solution is “bunching expenses,” which is a term used to describe incurring as many expenses as possible in a particular category during a particular tax year. Of course, doing this in one tax year will usually significantly diminish any chance of repeating it the following year.

What You Need to Know About Deducting State and Local Taxes

Taxpayers that itemize deductions on Schedule A, (and file Form 1040) can deduct the cost of state income taxes on their federal tax return. The ability to deduct the full cost of these taxes  has its obvious advantages. Taxpayers may either claim such a deduction from state and local income taxes or state and local sales taxes, but not both. Basically, to be deductible, the tax must be imposed on a taxpayer and must have been paid during the particular tax year. Taxpayers that elect to deduct state and local general sales taxes, may use either their actual expenses or the optional sales tax tables.

The Alternative Minimum Tax, Explained

The Alternative Minimum Tax, ExplainedUnder the Internal Revenue Code and the vast body of rules and regulations related thereto, certain tax benefits can significantly reduce the amount of taxes that a taxpayer may owe. The alternative minimum tax (AMT) applies to those taxpayers with high levels of income by limiting these benefits and ensuring that these taxpayers pay at least a minimum amount of tax. If the AMT applies to you, you may lose many credits or deductions you would normally receive if you didn’t have to pay the AMT.

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