Last Updated: May 19, 2009
No one can blame you if you don't consider tax planning to be a year-round activity. Financial planners, however, consider tax planning to be an ongoing activity, not just something you think about on April 15.
And now rather than December is the perfect time to address whether you will have to pay Alternative Minimum Tax (AMT) or not, according to John Kilroy, CPA, CFP®, and board member of the FPA of Philadelphia Tri-State chapter.
AMT, according to the Internal Revenue Service (IRS), is a separately figured tax that eliminates many deductions and credits, thus increasing tax liability for an individual who would otherwise pay less tax. Learn more at the IRS' Web site.
According to Kilroy, Congress 'patched' the exemption against AMT early in the year rather than waiting until December.
"This should give all taxpayers a chance to assess now rather than in December what exposure they may have to the AMT in 2009. More taxpayers will learn they have none. For those whose AMT income exceeds the 'patched' exemption, tax planning may be different than normally considered to keep the total tax due down. For instance, it may not pay to accelerate deductions and defer income. Some may find reason to embrace the AMT to take advantage of its 28 percent highest marginal rate," said Kilroy.
Of course, this type of planning should be done with a seasoned and qualified financial professional. If you think you might need help with your tax planning and managing AMT, consider hiring a financial planner.