Personal Financial Planning - New Canaan, CT 06840

Income Tax Rates - Virtually all income tax rates are coming down by an average of 1% per year. In addition, dependant tax-credits are going up. Deferring income and taxes where possible while taking as many deductions currently will help you maximize the affect of these rate changes. Also, use flexible spending accounts of they are available by your employer.

Things to watch out for - The Alternative Minimum Tax (AMT) is set up as a second taxation system that is for all practical purposes, a flat-tax with a single deduction. Your taxes need to be figured both ways and yes, you guessed it... you pay whichever one is higher. More and more people are getting snared by the AMT because the single-deduction is not being adjusted faster than incomes are rising. Not to mention that regular tax-rates are declining while the AMT rates are not. It is difficult to avoid AMT but there are some helpful things to know. ISO stock options, or "qualified" options are one of these things. Exercising ISO options and holding the stock is a possible way to avoid income tax in favor of the lesser capital gains tax . However, this transaction is not counted in the income tax calculation, it is counted in the AMT calculation.