Taxpayers can choose to use the standard deduction, or they can itemize deductions. When given a choice, choose the option that results in a lower tax bill. Even if your itemized deductions are lower than the standard deduction, itemizing can still help if you are subject to the Alternative Minimum Tax (AMT).
The standard deduction is removed entirely from the AMT, however, some itemized deductions may remain in place (or are reduced) under the AMT. Therefore, choosing your lower itemized deductions can improve your net tax on the AMT side.
- AMT eliminates the standard deduction
- Some itemized deductions still apply under AMT
- If AMT is in play, choosing itemized deductions—even smaller ones—can lower total tax
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