Prepay state and local taxes before Jan. 1

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in Small Business Tax

Do you have an installment of property tax due early next year? Make sure you pay state and local taxes before Jan. 1. In that case, you can deduct the payments on your 2009 return, thereby reducing your current tax liability.

Caveat: Don’t prepay if you expect to owe the alternative minimum tax (AMT). State and local taxes aren’t deductible for AMT purposes, so prepaying would do you no good tax-wise.

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