What are some general rules of thumb for guessing whether you will be subject to the Alternative Minimum Tax?

Question

I want to know if there are certain behaviors to avoid in the coming years to make sure I do not expose myself to the AMT.

Should I spread any capital gains over time, so they don't accumulate in a single year?

Would a spouse going back to work make us more susceptible to the AMT?

Answer 1

Amt effects higher income taxpayers, meaning at this time $90,000 and above. This has to be in combination with high deductions for taxes (real estate and income) and high miscellaneous deductions.
Capital gains don't affect AMT as you get the 15% tax rate on both the regular tax and the AMT tax. The problem here is that you would pay state income tax on the gain so you would need to see the effect of this payment on AMT. You should run the tax numbers to see which year to pay the state tax on the gain, or how much to pay this year and how much to pay with the return next year.
If you had 15 or more personal exemptions you could also run up against the AMT.
A spouse could cause a problem because your more income would cause more state income tax withholding that could cause AMT.

Answer 2

if you take out a lot of personal exemptions and a lot of itemized deductions, AMT might be creeping up the corner.

the best way to treat capital gain is to hold them for longer than a year, then you get the preferential rate, which means lower taxes.

it is rather easy to pay AMT because the congress is still stuck to the 1950's... i think more and more middle class has to pay AMT now, not only the ultra super rich folks.

Answer 3

Even with no loopholes whatsoever and no itemized deductions at all, you will pay an increase to your calculated tax simply by having high in
come. Think of it as a tax surcharge

The instructions are remiss by not listing high income as one of the requirements for filing 6251. IRS give you the impression it's just for people using too many deductions/loopholes, but just having high income is enough to bump up your tax.

Ron