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How to beat the Alternative Minimum Tax this year and beyond

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in Small Business Tax

Despite continued public outcry, Congress failed to enact any significant tax relief from the Alternative Minimum Tax (AMT) this year. All it did was Band-Aid a couple of tax-law sections. So, no matter how you twist and turn, you may not be able to dodge a tax hit from this lethal “stealth tax.”

Our advice: Make the best of a bad situation. It’s possible to reduce your AMT fallout by prepaying certain expenses or postponing income. Or, you might use a reverse strategy (outlined at the end of this article) to beat the system. The worst thing is to do nothing now and take your lumps at tax-return time.

How the AMT works: Each year, you’re required to run parallel calculations of your regular income-tax liability and your AMT liability. In effect, you pay whichever tax is higher.

5 steps for figuring the tax

Here are the five basic steps for computing your AMT liability:

1. Figure out your taxable income for regular tax purpos...(register to read more)

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