Discussion:8801 - AMT Credit - MFS?

In 2009, there is no AMT.

However, when the MFJ/MFS optimization form is reviewed, the clients save $3,200ish by filing seperate because they are receiving the AMT credit. However, there is NO 2009 AMT credit (referred to as minimum credit) if they were to file joint.

I've read the form 8801 and am still confused. Has anyone seen this? Rationale?

Are any of the credit carryforwards coming from 2006 or before?

The credit for 2008 and 2009 can come through the tax return in one of two places, line 53 or line 70. Be sure you look at both lines of the MFJ return.

We have this "give the AMT credit" back to the taxpayer over a three year period, and not only is it screwy, but whatever credit was left at the end of 2007 was to be refunded back to the taxpayer 1/2 in 2008 and 1/2 in 2009 (if the credit c/o is from 2006 or before.)

This refund of the credit normally will show up on both lines of the returns (at least in my cases as I am in Oregon and we have huge AMT problem since our taxes are a two legged stool)

In cases where the taxpayer is not in AMT current year, then it shows on line 53.

If you ever did any accounting that involved "deferred income tax" there was this concept where you tried to identify timing differences from permanent differences. Officers life is a perm difference, SL for books vs. accelerated for tax is a timing difference. You had to ferret out the timing from the permanent difference to do the tax accrual correctly.

AMT has taken on a timing vs. permanent difference concept. As you probably know, state taxes are not allowed as an AMT deduction. This would be a permanent difference. PAL's or depreciation preferences would be timing differences. If you exercised stock options with a built in gain, that would be a timing difference.

If you have timing differences, that created AMT, you can get those $$ back in later years. Lets say you had AMT in 2008 that was due to timing differences. Then in 2009, if your regular tax is less than your AMT tax, you can get an AMT credit (like withholding or other $$ for $$ items) which basically gets you back the AMT you paid in the prior year. Most times, the AMT is due to a combination of both perm and timing differences, and God Bless us for good software, they should hopefully correctly identify for us the amounts associated with each.

I hope this was understandable.

Taxable income as always been around $275-$300K and they have always filed a joint return. Nothing crazy going on, no temporary differences (ie. ISOs, etc.) or perm difference (depn. differences of any magnitude. Maybe a tax refund or depn of assets for $1-2K.

Client was not in AMT in 2006, filed Joint Client had $2,502 of AMT in 2007, $25,000 of Sch A taxes Client had $3,548 of AMT in 2008, from $25,612 of Sch. A taxes

In 2009, as I stated, it is giving them $0 credit when they file joint.

MFS gives the TP $1,774 and the spouse $1,336 ($3,111 in aggregate) which is close to the AMT in 2008.

EVERYTHING is coded as joint (except income) as it should be. What am I missing?

one thing that will have to be looked at is the difference between, adjustments and preferences vs. exclusion items.

exclusion items generally never generate an AMT credit carryforward, as they are permanent in nature. taxes, medical and dental, mortgage interest deductible for AMT vs. regular are permanent differences. you need to have something happen in the year of the AMT happened in the line 10 to line 28 area. If no entries in these areas, I doubt you have an AMT credit carryover.

I need to ask again, when you "split the return" did the computer take all those items to each separate return based on AGI, based upon 50/50 or what? IO am not familiar with the software, wish I could be of more help.

When we prepare a return, the default is 'joint' i.e. 50/50. Unless there are INT/DIV to one spouse or wages to one spouse, etc. everything defaults to joint. So, things like taxes paid, re taxes mtg. interest, all default to the 50/50 category.

When the return was split. most everything was 50/50, except for TP/Spouse wages, his schedule C, and maybe one or two intrest items.

If TP makes $150k and she makes $70k, then on Schedule A, those taxes paid should be properly allocated to him and her, both in the current year and last year (the year of AMT).

I can tell you right now, there are no timing differnces of great nature, if any.

The real problem I have refers back to the original question. Why would the MFJ return have no credit yet the MFS show alomost the entire AMT fo 2008 in aggregate. TPs have never filed MFS and have only been in AMT those two years due to taxes. $275 of TI + $20+ in taxes..

Mind you, the pref. items total about $600 - it's soley from Schedule A. (taxes are $20,000)

I am baffeled.

6251 FROM 2008

L.1 $255,988 3. $26,383 6. $-1,253 18. $(258)

I feel the way I do because there are NO timing differences! Its an 08 AMT tax flowing through as a credit in 09 because regular tax is less than AMT. I am afraid my tax software is ONLY looking at the reg. tax versus AMT, figures it lower, thus figures a credit is due.

But why in MFS and not MFJ when the return is split right down the middle?