This year, nearly 5 million taxpayers could be subject to the alternative minimum tax (AMT).

Chris Hennessey explains the AMT and offers some strategies to reduce the liability.

The AMT was established in 1970, creating two parallel tax systems. Taxpayers calculate income tax under both systems and pay the higher amount. There are some tax deductions that are only available with the AMT. At the same time, there are other items that are not deductible, such as state and local taxes.

Here are some strategies to avoid or reduce AMT for taxpayers who are subject to the tax:

• Push off deductions that are not allowed under the AMT until the following tax year.

• Be mindful of capital gains that could trigger the AMT and try to realize those gains next year.


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