Branch Financial Strategies

Offering Safe Financial Strategies &

Helping Protect Your Financial Future. . .Your Legacy

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Helping plan your financial future

Professional Services:

  • Retirement and Estate Planning
  • CD stragegies - wealth protection
  • Strategies to reduce taxes
  • IRA distributions and rollovers
  • 401K - SEPS - Keogh plans - TSA's
  • LTC - long term care
  • Indexed Life Insurance + LTC rider
  • Fixed & Indexed annuities + lifetime income
  • 403B - 457 plans
  • Interest Income strategy
  • Financial analysis

Special article of interest:

Alternative Minimum Tax (AMT) Starting to Include More People

      Originally created to ensure that very high-income individuals pay a fair amount of income tax, the alternative minimum tax (AMT) now often includes middle-income taxpayers.  More than 3 million people paid the AMT in 2004 (U.S. Senate Committee on Finance, February 15, 2007, Senator Chuck Grassley, Iowa). 
      The AMT was created in 1969 to target wealthy taxpayers who were able to legally eliminate their entire income tax liabilities.  However, there was a “failure to index AMT for inflation,” Grassley said. “Thirty-eight years of inflation has allowed the AMT to spread to literally millions of taxpayers who were never intended to pay it in the first place.”   

     Determining if you have AMT exposure requires more calculations than are appropriate here (you are strongly encouraged to consult with a qualified tax professional if your income is in the middle/upper middle area or more), however, there are some items that may cause you to be liable for AMT 

  • Claiming too many exemptions  
  • Claiming a deduction for state and local income taxes  
  • Deductions related to interest on second mortgages  
  • Medical expense deductions  
  • Incentive stock options  
  • Long-term capital gains  
  • Tax shelters and tax-exempt interest

     (Remember, these items do not guarantee you will have an AMT liability, they just may lead to one. The IRS has an online AMT assistant to help you determine your AMT liability:,,id=150703,00.html – and you should consult with a qualified tax professional.)

        If you believe you might be heading toward an AMT liability, there are some things you may be able to do to limit it: 
       Long-term capital
gains may trigger AMT. If possible, you might want to delay the sale of a capital gain asset until the next tax year. This may limit your capital gains for the current tax year. If you can delay receiving income, you may be able to stay under the threshold where AMT is a concern. 
      Watch out for municipal bond funds that invest in private activity bonds.
“Private activities” may include housing projects, hospitals, or other municipal building projects. Check the fund’s prospectus, and consider calling your qualified investment advisor.  You might want to pre-pay state and local taxes.  If you have incentive stock options (ISO), you might want to sell the shares in the same year you exercise the option. This probably won’t eliminate the AMT, but it will give you income to pay it related to ISO income. Or, if possible, spread the exercise of the options over several years, which may help spread the income and tax liability. 

       Finally, you might gain some benefit from paying AMT in previous years. In December 2006, Congress passed a law that allows people to claim a credit for previously unused AMT credit (for tax years 2007 through 2012). However, if you did not previously exercise ISOs or claim accelerated depreciation, you may not have a credit available -- check with your qualified tax professional.

For more information:

·  U.S. Senate Committee on Finance, February 15, 2007, remarks by Senator Chuck Grassley, Iowa 

·  AMT 101, Fairmark Press Inc. (publishes plain language books on taxes and investing). 
· “A Tax Guide to AMT” by Smart Money  The IRS link to AMT information. 




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