As year-end approaches, you may be trying to accelerate deductible expenses into 2013 to reduce, or at least defer, tax. But you must beware of the alternative minimum tax (AMT) — a separate tax system that limits some deductions and doesn’t permit others, such as:

  • State and local income tax deductions
  • Property tax deductions
  • Miscellaneous itemized deductions subject to the 2 percent-of-adjusted-gross-income floor, such as investment expenses and unreimbursed employee business expenses

Accelerating these expenses could trigger the AMT, because you must pay the AMT if your liability exceeds your regular tax liability.

The American Taxpayer Relief Act of 2012 set higher AMT exemptions permanently, indexing them — as well as the AMT brackets — for inflation going forward. This will provide some AMT relief, but higher-income taxpayers could still be vulnerable.

If you need help determining if accelerating deductible expenses could reduce your 2013 tax bill or trigger the AMT, contact our tax advisors in Michigan, Houston or Ft. Lauderdale.