Alternative Minimum Tax Planning - Importance of Controlling Your Income Retirees

Retirees usually are the most surprised of all taxpayers when they find themselves in the Alternative Minimum Tax. Unfortunately, there is no "age exemption" - if you have the right blend of income and tax deductions, it hits you just as hard as it hits everyone else. You could reach 100 and still be paying the AMT. But with proper tax advice and planning, retirees actually are well-positioned to do something about the AMT.

The income you earn on your investments plays a major role in the amount of Alternative Minimum Tax you pay. Certain types of investment income, as well as the amounts of this income, all factor into the AMT formula. And the good thing about investments, from an AMT planning point of view, is that you have complete control over them - you can change them any time you want.

The income investors generate includes interest, dividends, capital gains, and income from real estate or partnership investments. These obviously vary depending on the investor's portfolio allocation among cash, stocks, bonds and other types of investments. The important issues are to what extent the timing of investment income can be controlled and/or the type of investment could be changed.

Interest income generally cannot be timed. Dividend income similarly cannot be timed, but an investor may be able to alter the amount of dividends earned by changing investment strategies.

State income taxes are a major reason for getting caught in the Alternative Minimum Tax - over 90% of all AMT payers have this item. Many retirees make quarterly estimated tax payments to meet their tax payment requirements. When is the last quarterly estimate due? January 15. Can it be paid in December instead? Absolutely. It is the individual's choice whether to pay that last 25% of the estimated state income taxes liability in one year versus the next, which can State income taxes are a major reason for getting caught in the AMT - over 90% of all AMT payers have this item.

Many retirees make quarterly estimated tax payments to meet their tax payment requirements. When is the last quarterly estimate due? January 15. Can it be paid in December instead? Absolutely. It is the individual's choice whether to pay that last 25% of the estimated state income taxes liability in one year versus the next, which can have a significant on the AMT.

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.