“With AMT, Think Out of the Box on Deductions.” That was the headline of an article in the April 29 issue of the Wall Street Journal. (Page D2.) The article stated:
“In some cases, taxpayers actually might owe less by choosing to itemize their deductions, instead of taking the standard deduction — even though their total itemized deductions are less than the standard deduction.”
The article quotes Martin Nissenbaum, national director of personal income-tax planning at Ernst & Young. He concluded that the itemized choice may be preferable “if all — or a large percentage — of those itemized deductions are allowable for purposes of the alternative minimum tax, such as charitable contributions or mortgage interest.”
The article also discusses how taxpayers may file amended returns to take advantage of the out-of-the-box choice of claiming the lower deductions and how taxpayers should write “IE” for “itemized elected” on the dotted line next to line 37 of the 1040. (It also cites an example of how a taxpayer received a bill even though she made the IE notation.) (Good old IRS.)
The Wall Street Journal's web site can be searched only with a subscription. Therefore I am including a link to a public article that's on the Tax Policy Center's site. That article gives the following advice:
“Test the itemized deduction “One of the many oddities of the AMT is that taking the standard deduction may lower your regular tax burden but raise your AMT. The reason: In the AMT you can't use the standard deduction ($9,500 for marrieds, $4,750 for singles), but you can deduct, say, $1,000 of charitable contributions that wouldn't be allowed with the standard deduction. Worse, the rules say that once you've claimed the standard deduction to calculate your regular tax bill, you must also use it for AMT, even if itemizing would save you money. So calculate your potential tax four times — with and without itemizing for both the 1040 and the 6251[the form for the AMT for individuals] — before you file.”
It isn't too late to do the numbers if you are working on an extension. Also, if you have already filed your return, depending on your savings, it may be worth while for you to file an amended return.