So how can you minimize your exposure to this shadow tax? The trick is to know which deductions and credits are allowable under the AMT and which ones are not. For instance, the standard deduction and personal exemption are not permitted. Neither are the deductions for state taxes, investment expenses, moving expenses, student loan interest, and child care. Some of the deductions associated with retirement plans also hit the chopping block. If these deductions comprise the bulk of your tax planning, you are a prime target for the AMT.

What is permitted? The deductions for home mortgage interest and charitable contributions are still available. You can also deduct casualty losses, and medical expenses above a certain amount. Finally, personal, non-refundable credits like the child care credit and the Hope and Lifetime Learning credits usually aren’t available to offset your AMT bill; however, Congress has tinkered with the credits in prior years, so you may want to watch for changes that could help you plan.

What is the moral of the story? If you earn more than $70,000 this year, you should keep one eye on the AMT. Whenever the AMT applies, expenses you thought would be deductible might not count, which can make tax season very expensive, even if you’re not the sort of person who can afford expensive stuff. Fortunately, if you are careful and know what to look for, you can save your pennies and plan ahead.

Interested in more tax advice? Check out our complete archive of Daily Deductions.