Tax Credit Confusion

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#21

04-03-2007, 06:07 AM

nomorebenz

Active Enthusiast

Join Date: May 2006

Posts: 179

Re: Tax Credit Confusion

Quote:

Originally Posted by SoopahMan

Just to be clear, the AMT should be either 0, or all the tax you're paying; it's an alternative tax model, so either you pay taxes under the regular model or, if the AMT model would charge you more, you pay the AMT instead. If the AMT came up as 0 that means you paid more under the normal model than you would have under the AMT model, not that you had no taxable income under the AMT model.

I'm not an accountant, but I keep track of tax laws so I can put my money where it belongs.

Also, you can make a lot less than $75000 and get hit by the AMT if you have a tax credit coming your way that's over $3000. Hybrid buyers getting such a large credit are in a unique category; before entering my investments but after entering $55k of my income, the AMT kicked in for me. After entering my investments, the AMT was below my normal tax.

Good clarification SoopahMan.

I'm so used to people asking what the threshold is where they might pay AMT as opposed to when one has to calculate their AMT income. If ones AMT income (AGI plus preference items) exceeds the exemption (single $42,500, Married-joint $62,550), he will have a minimum tax. So theoretically one can have an AGI of 0 and still owe AMT.

In your case, you are probably getting a reduction from past AMT calculations or some non-passive losses.

To expand on what you stated earlier: The Alternative Motor Vehicle Credit(Form 8910) is affected by the calculated AMT(Form 6251, line 33) and not the AMT due(Form 6251, line 35).

Last edited by nomorebenz; 04-03-2007 at 06:34 AM.

#22

04-03-2007, 07:10 AM

tomdavie

no more oil

Join Date: Apr 2006

Location: Palm Bay Florida

Posts: 230

Re: Tax Credit Confusion

i have a question about the AMT

Is the AMT of 75k after i take my deductions allowed under the AMT ?

That will make a huge difference. If it is based on simple gross amount, we may have a problem, but if we take the deductions allowed under the AMT , then we are under the 75k and thus should get our entire tax credit.

Am I way off here?

#23

04-03-2007, 08:40 AM

nomorebenz

Active Enthusiast

Join Date: May 2006

Posts: 179

Re: Tax Credit Confusion

Quote:

Originally Posted by tomdavie

First of all: Don't take this as tax advice. See your local professional regarding your particular situation.

Everyones situation is different. You are probably ok but you won't know until you complete Form 6251. If your AMT income (that's after deductions and preferences) is below the exemption, you don't have AMT. If it is more , you will have an amount on line 33.

If you have an amount on line 33(tentative AMT), your credit may be affected. If you have AMT (line 35), you will not get the credit.

Here's an example:
Married Couple, 2 Kids
Gross Income = 80,000
Tentative AMT(line 33) = 620
AMT (line 35) = 0
Regular Tax = 2520

Max Credit = 2520-620=1900
Actual AMV credit = 470

The Hybrid credit was reduce by other credits which the taxpayers were claiming. These clients paid no tax for this year and next year will start with a blank slate. There is no carry over for the credit.

#24

04-03-2007, 05:41 PM

centrider

Ridiculously Active Enthusiast

Join Date: Aug 2006

Location: Long Beach, Calif

Posts: 530

Re: Tax Credit Confusion

Thanks. This was the first year I didn't sit down with my accountant, instead I sent all the info in to him. Else, I would have asked him what was going on. You're right. I did pay more this year. Glad I got the full credit. Also donated my '95 Saturn, so that made me feel good also.