AMT - this is our first time to encounter this. Our understanding is that we cannot itemize. Is that accurate? Any way to adjust our entries to avoid this situation?

You could potentially take out some deductions but the refund or balance due would stay the same. As you reduce the deductions, the AMT will also go down, but there really is no point in doing it.

There are other issues that cause AMT:

When we calculate your "regular" taxes for the year, we also calculate your AMT taxes behind the scenes. We do this on every personal (individual) tax return.

If your AMT tax calculation exceeds your "regular" tax calculation, you become one of the several million taxpayers who have to pay the AMT this year.

Upper-middle class taxpayers are the most likely victims, but this is not always a given. Risk factors include:

• Exercising ISOs (incentive stock options);
• Living in an area with a high state and/or local income tax;
• Supporting multiple dependents, especially if you're filing jointly;
• Taking a home-equity loan for something other than improving your home;
• Taking a large miscellaneous deduction like investment expenses and unreimbursed employee business expenses;
• Claiming business depreciation.

You don't have to pay your AMT separately; we've already accounted for it in your refund or taxes owed amount.