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Posted by dgdg on June 8, 2006, 2:22 pm
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Hello all,
In the past, AMT foreign tax credit (AMTFTC) was limited to
90% of AMT. As a result, even though all of my income was in
the UK, and I paid tons of UK taxes, I still had to pay a
bit of US taxes. Effectively, my marginal US tax rate on my
UK income was 2.6% (i.e., 10% of 26%).
However, the 90% limitation was repealed (Yay!) starting
with the 2005 tax year.
So here's the question: Can I get back the AMT I paid in
previous years using a carryforward? Because the limitation
no longer applies, I won't pay any AMT this year (and I will
likely never pay AMT again if I continue to live abroad).
Do I have to wait until I am subject to AMT again to carry
forward the AMTFTC that was limited in the past?
I appreciate any help from the knowledgable people here!
By the way, it's been many years since I've been here. I'm
amazed to see some of the same names.
dg
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Posted by ed on June 20, 2006, 2:12 am
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dgdg wrote:
> In the past, AMT foreign tax credit (AMTFTC) was limited to
> 90% of AMT. As a result, even though all of my income was in
> the UK, and I paid tons of UK taxes, I still had to pay a
> bit of US taxes. Effectively, my marginal US tax rate on my
> UK income was 2.6% (i.e., 10% of 26%).
>
> However, the 90% limitation was repealed (Yay!) starting
> with the 2005 tax year.
>
> So here's the question: Can I get back the AMT I paid in
> previous years using a carryforward? Because the limitation
> no longer applies, I won't pay any AMT this year (and I will
> likely never pay AMT again if I continue to live abroad).
> Do I have to wait until I am subject to AMT again to carry
> forward the AMTFTC that was limited in the past?
>
> I appreciate any help from the knowledgable people here!
>
> By the way, it's been many years since I've been here. I'm
> amazed to see some of the same names.
I'm sorry you didn't get an answer to your question as I
have never been able to figure out AMTFTC and am curious.
Without any other guidance I suggest you get out the trusty
form 8801 and work out the numbers. It seems like it will
depend on whether the AMTFTC was created on exclusion items
or not. You don't have to pay an AMT to get it back, and in
fact you can only get it back in a year you don't otherwise
owe AMT. Anyway, the only way you will get it back is by
completing the 8801. good luck
ed
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Bruce E. Cobern on June 21, 2006, 1:50 am
Please log in for more thread options >> In the past, AMT foreign tax credit (AMTFTC) was limited to
>> 90% of AMT. As a result, even though all of my income was in
>> the UK, and I paid tons of UK taxes, I still had to pay a
>> bit of US taxes. Effectively, my marginal US tax rate on my
>> UK income was 2.6% (i.e., 10% of 26%).
>>
>> However, the 90% limitation was repealed (Yay!) starting
>> with the 2005 tax year.
>>
>> So here's the question: Can I get back the AMT I paid in
>> previous years using a carryforward? Because the limitation
>> no longer applies, I won't pay any AMT this year (and I will
>> likely never pay AMT again if I continue to live abroad).
>> Do I have to wait until I am subject to AMT again to carry
>> forward the AMTFTC that was limited in the past?
Well, since nobody else answered, I'll give it a go, and
maybe make ed happy as well. :-)
When you pay AMT in a given year, you may or may not be
generating an AMT credit carryforward. Thus, for example,
if you are in AMT because of thngs like taxes paid or
miscellaneous itemized deductions, you do not generate a
credit. If, OTOH, the AMT is generated by "timing
difference" type items, like stock options or depreciation,
then the AMT attributable to those items becomes an AMT
credit to be used in any year when you are NOT in the AMT.
The AMT you paid because the FTC was limited to 90% of the
Tentative AMT in prior years is definitely an AMT that
generates an AMT credit. Thus, any of your AMT that was
generated this way (to be calculated using form 8801 and,
essentially, using the allowable AMT tax credit BEFORE the
90% limitation as the AMTFTC on the 8801) is available to
use as a credit in any future year, without expiration, that
your regular tax exceeds your tentative AMT, in order to
reduce your tax to that tentative AMT. In affect, you
continue to pay your tentative AMT as your tax, even though
it is lower than your regular tax, until you use up the
credit.
Your second question has to do with utilization of an AMTFTC
carryover - foreign taxes paid that were not utilized
against tax. That carryover is used exactly the same way
your regular tax FTC carryover is used - you calculate how
much is used to reduce your AMT based on your foreign source
income, tax rate, etc. If you are still in the UK, then the
odds are that you are accumulating additional FTC
carryovers, not using the ones you already have. Until you
have foreign source income that is taxed at a higher rate in
the US than in the foreign country you won't use up your FTC
carryovers.
--
Bruce E. Cobern, CPA
mailto:bec@pipeline.com
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
|
|
Posted by ed on June 23, 2006, 10:18 pm
Please log in for more thread options dgdg wrote:
> In the past, AMT foreign tax credit (AMTFTC) was limited to
> 90% of AMT. As a result, even though all of my income was in
> the UK, and I paid tons of UK taxes, I still had to pay a
> bit of US taxes. Effectively, my marginal US tax rate on my
> UK income was 2.6% (i.e., 10% of 26%).
>
> However, the 90% limitation was repealed (Yay!) starting
> with the 2005 tax year.
>
> So here's the question: Can I get back the AMT I paid in
> previous years using a carryforward? Because the limitation
> no longer applies, I won't pay any AMT this year (and I will
> likely never pay AMT again if I continue to live abroad).
> Do I have to wait until I am subject to AMT again to carry
> forward the AMTFTC that was limited in the past?
Thanks, Bruce, that helps.
ed
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
|
|
Posted by dgdg on June 27, 2006, 12:38 pm
Please log in for more thread options ed wrote:
> dgdg wrote:
>> In the past, AMT foreign tax credit (AMTFTC) was limited to
>> 90% of AMT. As a result, even though all of my income was in
>> the UK, and I paid tons of UK taxes, I still had to pay a
>> bit of US taxes. Effectively, my marginal US tax rate on my
>> UK income was 2.6% (i.e., 10% of 26%).
>>
>> However, the 90% limitation was repealed (Yay!) starting
>> with the 2005 tax year.
>>
>> So here's the question: Can I get back the AMT I paid in
>> previous years using a carryforward? Because the limitation
>> no longer applies, I won't pay any AMT this year (and I will
>> likely never pay AMT again if I continue to live abroad).
>> Do I have to wait until I am subject to AMT again to carry
>> forward the AMTFTC that was limited in the past?
> Thanks, Bruce, that helps.
Thanks Bruce and Ed. That's very helpful.
I've always thought that AMTFTC was terribly confusing. The
amount of time I spend on it each year is worth many, many
times my US tax liability.
dg
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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