This issue has been raised in other threads, but I'm not sure I have ever seen exact answers to the following questions. For the past two years my income has been unusually large, due to the sale of shorefront property in a state other than my home state. Obviously this had tax ramifications in both states. Being somewhat naive, I went ahead and listed the large taxes as deductions. My AMT was several thousand dollars in each year. (None next year I presume as my income and property taxes return to "normal" levels.) I have already filed my tax return for this year, and obviously last as well. I focus first on whether or not the law says (or implies) that once you have chosen to itemize, you then have an obligation to itemize fully. So my first question is: Do you? (Although I gather not.) If possible, for example, to understate state taxes, my next question is under what circumstances would benefit to the AMT accrue? I currently have a refund of $301. As an extreme test, using TurboTax, I reduced my state taxes to zero to see what would happen. The result was an amount due of over $1300. (My AMT of course went to 0.) Obviously there was no benefit to completely omit my state taxes as deductions, which again I would have guessed. If I looked at various levels of understatement, however, would there have been some level at which there would have been benefit to such understatement? If understatement is allowable, would there have been great benefit to finding that "critical level" that would have minimized my total tax? Or would that benefit have been relatively small? I realize that computation of AMT is complex and you don't have exact figures, but I'm just looking for a rule of thumb as well as perhaps some consolation that I haven't paid much more than I needed to. Thanks very much for your help!
Frank