Thursday, March 08, 2007

Beware the AMT tax trap

I got most of my tax preparation done for my 2006 tax return yesterday. Yeah, it was a riot.

I don't think anyone likes to think about tax time, but I for one do my very best each year to minimize my tax burden using all of the deductions allowed to me under current tax law. I don't want to give away more of my income/proceeds than I have to, or want to.

Below is a link regarding the AMT tax trap that faces millions more each year. It has become a serious problem for middle class America. Fixing it will be extremely costly and difficult.

Good article on the Alternative Minimum Tax Debacle

I don't understand the mentality of "I'll just pay my taxes and be done with it". I face this a lot when potential clients decide tax planning is too much effort, or listen to their CPAs who also don't understand the value of planning and tell them it's easier to just pay the piper.

But, it's not my money or my financial future. I can't worry more about it than the one who faces the dilemma. Just remember, in addition to everything else, a large capital gain often triggers the AMT tax and there goes even more of your money you could have protected.

My best advice: Take the time and make the effort to understand your alternatives. Then, if you choose to "just pay the taxes" so be it.

Paula Straub

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