anyone building a buffer for AMT surprises?

[Elf_Rubi02]

Everyone likes to say AMT was designed to keep rich people from dodging taxes, but in practice it feels like a trap for the upper middle class. You lose deductions on property tax, dependents, and state income tax, and suddenly that "26% flat rate" doesn't look like a bargain anymore. The worst stories are people who got nailed on incentive stock options during the dot-com years... taxed on paper gains that evaporated before they could sell. Imagine owing the IRS hundreds of thousands on stock that turned out to be worthless. For those of us chasing early retirement, AMT feels like a reminder that the tax code can pull the rug out anytime. Anyone else here building in a buffer for this, or are you just hoping income streams like rentals and dividends stay outside its reach?

 

[tully-craft12]

I get what you're saying. AMT got me too the year I used stock options right before the market dropped. I found out the hard way that gains on paper don't always mean real money. Now I play it safe with rental income and dividends for early retirement. I also run test tax returns every fall to catch any AMT issues early. It's not perfect, but it helps me worry less.

 

[chef nancy]

keep a buffer and run projections every year, that's what i do cos its better to catch it early than get blindsided