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Investors: Watch out for these 5 alternative minimum tax traps

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in Small Business Tax

With the alternative minimum tax (AMT) becoming a maximum nuisance for many taxpayers, it’s smart to recognize the AMT danger zones early.

But the AMT “stealth tax” can also blindside investors who normally don’t face AMT problems.

Reminder: The AMT runs on a separate track alongside your regular income tax calculation. Start with your annual taxable income. Next, add in special “tax preference items” and make other adjustments. Then, subtract a special AMT exemption amount based on your filing status. 

Finally, apply the AMT rate to the remaining income and compare it to your regular tax liability. Then, pay the higher of the two. (The AMT rate is 26 percent for the first $175,000 of AMT income; 28 percent above that mark.)

If you haven’t paid the AMT in the past, you may not be paying close enough attention to it now. But your investment activities might be pushing you into the danger zone.

Avoid these investor-related AMT ...(register to read more)

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