Tax reform made changes to the tax law that significantly impact the alternative minimum tax AMT. The changes could mean more money in your pocket and less going to the government.
If you own a C corporation, then you are the big AMT winner: Tax reform completely eliminated AMT for C corporations. C corporations are now subject only to a flat 21 percent income tax rate.
For individual taxpayers, the news is pretty good: tax reform increased the AMT exemption amounts (and they will continue to increase for inflation).
Your AMT exemptions phase out if your AMTI is over a certain threshold. Good news—tax reform substantially increased these thresholds:
These changes mean that it is less likely you will pay AMT in tax year 2018 and going forward.
Tax reform also took aim at the most common deductions that triggered AMT, by:
You probably weren’t happy with the limitation on the state and local tax deduction. Because you live in a high-tax state, you stand to lose tens of thousands of dollars in tax deductions.
However, if you pay a lot in state and local taxes, you probably didn’t get the full benefit of this deduction, because AMT clawed back its tax benefits. If you paid AMT in 2017, then you still might pay less tax under tax reform even without these deductions.
Planning for AMT is something to be proactive about. If you have any questions on how the AMT may affect you, your team here at Luster Tax Consulting would love to take a look at your situation and see how we can plan accordingly.
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