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