I just received this email. The timing is a little too ironic, don't cha think?
To All My Valued Employees,
There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn't pose a threat to your job.
What does threaten your job however, is the changing political landscape in this country. Of course, as your employer, I am forbidden to tell you whom to vote for - it is against the law to discriminate based on political affiliation, race, creed, religion, etc.
Please vote for who you think will serve your interests the best. However, let me tell you some little tidbits of fact which might help you decide what is in your best interest. First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a back story.
I wasn not talking about delaying the payment of taxes past the due date. People sometimes accelerate property tax and state income taxes forward to an earlier year to speed up the tax deductions, and I am saying that is usually useless if you are in AMT.
The truly rich usually don't pay AMT. I am talking about incomes in seven figures. Unless they have capital gains, they usually don't pay AMT and they may not pay it even if they do have capital gains and qualifying dividends (which are treated like long term capital gains and taxed at preferential rates). The seven figure incomes are usually planned for as "regular taxpayers", not "alternative" ones, but it has to be determined case by case.
Property tax & state tax are due when they're due (unless you want to pay penalty & interest) and in most cases prop. tax comes right out mortgage escrow. Even if you don't pay those taxes on time it's going to catch up sooner or later and must come out of the AMT calculation. Same goes with business expenses. So, bottom line is it is an additional tax to the "rich".
You have to pay whichever tax calculation is higher. The choice you have is a planning one. If you are going to pay AMT every year there is no point in prepaying your property tax except when it is due and no point in paying up your state tax in December to get a deduction. Those taxes are not deductible for AMT. The same goes for employee business expenses which also are not deductible for AMT.
wait...are you saying there's a choice in the matter and one doesn't have to pay the AMT way? I thought the AMT added back in some deductions before calculating the tax, who would choose that?
You are either a regular taxpayer or an alternative taxpayer. You have to play the strategy that meets your situation. If your income is in a certain range (I don't know your state so I don't know your range) or you have lots of capital gains, you are an alternative taxpayer and you actually WANT to be in AMT. You would be messing up if you paid a higher regular tax. It is a version of flat tax that is a reality for millions of taxpayers, a few million anyway.