INSIGHTS & IDEAS

AMT Year-end Tax Planning

Generally, it is advisable to prepay the 4th Quarter State estimated income taxes (due on January 15, 2008) on or before December 31, 2007 in order to treat this payment as an itemized deduction on the 2007 tax return.  This strategy does not work if one is subject to the AMT since state taxes are not deductible for AMT purposes. 

On December 19th Congress passed a one year patch to prevent the AMT from expanding significantly.  So, if you have not been subjected to the AMT in prior years and your tax situation has not materially changed, chances are that you will benefit by paying your 4th Quarter State estimated taxes prior to December 31, 2007.  Of course, the best way to determine which strategy is best, is to actually perform computations under various scenarios prior to year-end and take appropriate action before December 31, 2007.  

Due to the late date of this tax legislation the IRS AMT instructions may be incorrect.  We will update you as soon as more current information is available.  



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