Finding out that your income is going to be subject to the alternative minimum tax (AMT) can come as a shock. But it doesn’t have to be surprising. Even better, you may be able to avoid it altogether if you plan at least a year in advance. Take these tips under advisement and talk with a licensed professional to make the best decisions.

• Using what you know about AMT, do a self-diagnosis. Determine if you have some or all of the circumstances that can give rise to being taxed under AMT. If you are at risk for the current tax year, especially, make an appointment with your tax advisor as soon as you can. It might not be too late.

• If you are trying to avoid AMT for the following tax year, you may need to accelerate your ordinary income and defer some deductions for the next tax year. Strongly consider deferring deductions that are not deductible for AMT, including state or local income taxes, investment advisory expenses, and real estate taxes.

• With time on your side, you may also want to examine accelerating some expenses, particularly if you are not subject to AMT this tax year. You could pay off home equity debt, for instance, because it’s not deductible under AMT criteria.

• Perform a multi-year analysis to expose potential planning options. You may find that it’s more beneficial to pay AMT one year to help out with credits for another. Some of the differences between getting taxed regularly, versus getting taxed under AMT, have to do with timing. In other words, you need to explore further than just one year to get a full picture of how to proceed.

• If your investments include incentive tax options (ISO), pay careful attention to whether they are disqualifying ISO dispositions. Some should be disqualified before the end of the year, depending on their relative values.

• There are several pitfalls that could land you in AMT territory if you’re not careful. For example, income from municipal bonds, except for a specific few, can be taxed under AMT. Mortgage interest is also tricky, because its effect on AMT depends on how the money was used.

Careful planning is critical if you’re concerned about AMT. Working with a professional CPA and staying proactive is the best way to avoid it. Your money was hard earned. Make sure you’re fully aware of how to reduce your final tax bill.

Ted Lanzaro is the founder of Lanzaro CPA, LLC, a boutique tax consulting firm specializing in the real estate and construction industries.  For more information about CPA Ted Lanzaro, check out his website at www.lanzarocpa.com and www.taxcpact.com