AMT/Tax Minimization Strategy

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Submitted by romeister on February 10, 2009 - 9:17pm

Hi piggs, this is a financially savvy lot, so I thought I'd throw out this question for some sage advice in a "what would you do" category. Suppose you're expecting an income of $1 million, and you had the choice between taking the entire $1 million in a single year, or taking $333,333 over three years. I am not familiar with the intricacies of AMT, but does one method yield better tax savings than the other? Thanks

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Rudimentary thought with no
Submitted by sc_alum on February 10, 2009 - 9:27pm.

Rudimentary thought with no real numbers to back it up - One might assume, given the state of the economy and the direction of government, that taxes are only going up from here for the near term. Since your tax bracket stinks either way, you might consider accelerating the income to sooner rather than later, thinking that you'll likely get hit harder in years to come than you will now.

Before I give my .02, what do
Submitted by 190pounds on February 10, 2009 - 9:56pm.

Before I give my .02, what do you do for a living and how many hours do you work a week? (I have a reason for asking).

it depends. is the source of
Submitted by ariffe22 on February 10, 2009 - 10:22pm.

it depends. is the source of the income capital in nature? if so, have you held it longer than 1 year to qualify for long term capital gains?

You might want to consider
Submitted by kismetsdad on February 11, 2009 - 10:25am.

You might want to consider relocating to Nevada Texas, or Washington to avoid the state income tax component. You can run a simulation in Turbo Tax for 1 year/3 year disbursment and Calif State tax versus Nevada no state tax. You end up with 4 different options.