Factor in the AMT
Make sure that you factor in the alternative minimum tax (AMT). If you're subject to AMT, traditional year-end maneuvers, like deferring income and accelerating deductions, can have a negative effect. That's because the AMT--essentially a separate federal income tax system with its own rates and rules--effectively disallows a number of itemized deductions. For example, if you're subject to the AMT in 2015, prepaying 2016 state and local taxes won't help your 2015 tax situation, but could hurt your 2016 bottom line.
AMT triggers: You're more likely to be subject to the AMT if you claim a large number of personal exemptions, deductible medical expenses, state and local taxes, and miscellaneous itemized deductions. Other common triggers include home equity loan interest when proceeds aren't used to buy, build, or improve your home, and the exercise of incentive stock options.