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Keep your sights on the Alternative Minimum Tax (AMT)

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in Small Business Tax,Small Business Tax Deduction Strategies

Of course, higher taxes are a major concern for upper-income taxpayers in 2013. The top tax rate increases from 35% to 39.6% on ordinary income, while the maximum rate for capital gains and qualified dividends soars from 15% to 20%. But that isn’t the only tax obstacle in your path this year.

Strategy: Don’t forget about the Alternative Minimum Tax (AMT). Although slight modifications to the AMT in 2013 may help, this “stealth tax” will still blindside millions of taxpayers.

Use 4 steps to compute the AMT

The AMT operates as a parallel tax system. After you’ve figured out your regular taxable income at tax return time, you must compute the AMT. There are four basic steps.

  1. Add certain “tax preference items” to your taxable income and make other technical adjustments required by law.
  2. Subtract from this figure an exemption amount based on your filing status (unfortunately, the exemption phases out at higher income levels).
  3. App...(register to read more)

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