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How to Claim AMT Credit
Created in 1969, the purpose of the Alternative Minimum Tax (AMT) is to make sure that high-income taxpayers who enjoy special credits and tax deductions pay at least a set minimum tax every year. If you have paid the AMT in a prior year, you may be eligible for an AMT credit this year or in a future year. As a general rule, taxpayers can claim the AMT credit when their income tax exceeds the amount set by the AMT rules. Follow the instructions on a few IRS forms and you will be able to calculate your eligibility for an AMT credit.
Gathering the Paperwork you Need
Collect your tax returns from prior years.You will need information from prior years’ taxes in order to determine whether you paid the AMT and whether you are eligible for an AMT credit this year. To be eligible for an AMT credit, you must have made an AMT payment at least once in a prior year.
- If you cannot locate your prior tax returns, you will be able to get them from the IRS. Visit the IRS website at www.irs.gov and follow the links to “Get a Tax Transcript” underneath the “Tools” heading. Follow the instructions, and you will be able to get immediate printouts of the tax information that you need.
- In addition to your 1040 tax form, you will also need Form 6251, also known as the "Alternative Minimum - Tax -Individuals" form. This is the form that you completed in a prior year when you paid your AMT. You will need data from the completed Form 6251 in order to claim a credit.
Get IRS Form 8801 and its instructions.Form 8801 is also called the "Credit for Prior Year Minimum Tax" form. You can obtain copies of all IRS forms at www.irs.gov, and then follow the link to “Forms & Pubs.” Just enter Form 8801 in the search bar and click on “Search.”
- Print both the Form 8801 and the Instructions booklet for Form 8801. The Instructions booklet will help if you have questions about completing the form.
Get a copy of this year’s completed Form 1040 or 1040A.In order to be eligible for an AMT credit, you must not be paying the AMT in this year. When you have completed your 1040 or 1040A, you will need those forms available to claim a credit.
Calculating and Claiming your Available AMT Credit
Complete IRS Form 8801.This form is entitled Credit for Prior Year Minimum Tax-Individuals, Estates and Trusts. Form 8801 will lead you through the calculations that you need to make in order to find out if you are eligible to receive an AMT credit based on prior AMT payments.
- You will begin by entering certain data from the prior year’s Form 6251.
- If you paid the AMT two or more years ago, and were due for an AMT credit in the prior year, then you may have a credit carryover. This would be shown on a prior year’s Form 8801. If this is true, then you will enter this amount on this year’s Form 8801 on Line 19, and it can increase your credit for this year.
- Using Form 8801, you will calculate the difference between your regular taxable income and your AMT income for the year. As an example, if your regular income for a given year was ,000, and your calculated AMT income was ,000, then you paid tax on ,000 (54,000-50,000) that you are eligible to claim as a credit in a future year.
Calculate this year’s tax.You will use Form 1040 or 1040A to calculate this year’s regular taxable income and this year’s regular tax. You also need to calculate whether you owe the AMT for this year, using Form 6251 as in prior years.
- If you owe the AMT, then you are not eligible for an AMT credit in this year.
Determine your AMT credit.Subtract the amount of AMT credit that you calculated on Form 8801, combined with any AMT credit you have carried forward from previous tax years, from your calculated “regular tax” for the current year. The amount you calculate equals the amount you can claim as a credit for this tax year.
- Your tax credit will be the figure you calculate on Line 25 of Form 8801. Make a note of this result for entry to your Form 1040 tax return.
- If your AMT is less than your regular taxable income, then you can claim an AMT credit, up to the amount of the difference. For example, if your AMT is ,000, and your regular taxable income is ,000, then you are eligible for a ,000 AMT credit in the present year. If you had additional AMT credit due from a prior year, you may carry over the remainder, to be claimed in a future year.
Claim your AMT credit.The amount of your AMT credit appears on Line 25 of Form 8801. Copy this number to Line 54 of your Form 1040 tax return. This AMT credit will reduce the amount of tax that you owe for the year.
- When you report the AMT credit on Form 1040, you will also need to check a box on Form 1040 showing that you completed Form 8801.
Report any AMT carryover amount.Line 26 of Form 8801 will calculate any excess AMT credit that you are not entitled to claim in the prior year. You will subtract this year’s claimed credit from the total credit you have earned, to determine the carryover credit. You will need to keep a copy of this Form 8801 as a record for future years so you will be able to claim the remaining credits.
- Find more answers to your AMT questions from the IRS by calling (800) 829-3676.
- The IRS adjusts and updates the rules for determining the AMT and for claiming AMT credit nearly every year. Stay up to date with the changes by reading the “Changes” section of Form 8801 each year.
- You are only allowed to amend a tax return for 3 years after you file it. Without the form, you won’t be able to claim any AMT credit. So, amend your tax returns as soon as possible if you didn’t file Form 8801 with previous returns. Without it, you won’t be able to claim any AMT credit.
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