So my accountant tells me that none of my deductions are going to really help since I'm in the AMT is this true? What crap? I don't own a house yet and I already had my 2 car's taxs removed, donations, work expenses not covered.

 

"I already removed my 2 car's...."

Sounds like you are reducing your itemized deductions trying to get out of AMT, which is common. I can't quite tell by your statement, but what some people don't realize is that you may save tax by itemizing only certain deductions so that the amount you itemize is LESS than the standard deduction. You need to check the box on the very bottom on Sch. A, electing to itemize even though your standard deduction would be higher. Be very careful because many states require you to file state returns the same way as your federal return so you could end up saving some money on the federal end but end up costing yourself on the state side.

The good: You do get tax credits for AMT you've paid. The bad: you only get them for "deferral" items and without a mortgage I'm guessing your big deduction on Sch. A is state taxes, which are "exclusion" items (along with all the common deductions) and dont count towards the credit. Also, if you hover around the AMT threshold, you may not ever get to use the credits or at least you may not ever get to use them in a big way.

Your work expenses...Do you get a W-2 only, or also a K-1? if you get a K-1 from you can "attach" the expenses to the K-1 activity instead of running through Sch. A. It's a more agressive stance but not that uncommon. That would help you capture some of the deduction

Other than that, sorry man, I think you're SOL. Since I'm pretty much living at the office until the 15th, I'll run your scenario by one of our partners tomorrow to see if i'm forgetting any AMT strategies. I'll let you know if they suggest anything.

 

thank you! yep just w2. I will talk to my accountant about the itemization. I'm going to have to buy a house this year so the govt. doesn't get all my money another yr in a row

 

Getting 80% of my income through K1s has helped me significantly. They'll figure out a way to tax me more within a year or two I reckon -_-

 

Agreed. With all increased spending many peoples effective tax rate could end up in the 40% range. With the talk of changing the way pass-through items are taxed and with capital gains rates as low as the are--and only slated to go up 5%--we may see a turn back to C corps.