As I work through TaxAct for my wife's 2012 IRS return I came across a couple of questions that I'm hoping to get clarification on...these were under the Credits section:
"The simplified foreign tax credit election for the AMT allows one to forgo the completion of part 1 of the AMT form 1116. This could be an advantage or disadvantage depending on the situation. Part III is then completed with numbers from form 1116 for the regular income tax...."
Check if this is the first year AMT foreign tax credit is being taken....
was the simplified election previously made......yes or no....
"In years after the first year that the AMT foreign tax credit is used the initial decision cannot be changed unless IRS approves to either begin or cease using the simplified election......"
Check if you have now have IRS permission to use........simplified election
Check if you now have IRS permission to stop using......no election
Neither election option applies....................................not applicable
I also came across this in the instructions for form 6251....
I'm not sure why one would make this election but from everything I can see its probably best not to, but rather, figure the AMT and the AMTFTC using the AMT rates - in our case that would be with no standard deduction.
As it turns out my wife is not subject to the AMT for 2012 as calculated by TaxAct no form 6251 is required...I also filled out 6251 by hand following the instructions to understand the mechanics
Simplified election for AMT
Moderator: Mark T Serbinski CA CPA
IRS has a tool to determine whether you should file form 6251:
http://apps.irs.gov/app/amt2012/assista ... ution=e3s1
Others have reported on this site not filing 6251 because they didn't owe AMT. But their not owing AMT was after the AMT FTC was taken into account.
The IRS was then kind enough to complete the 6251 form for them. However the IRS did not complete the AMT 1116s for them and so sent them a bill for tax owing.
It may be best to file the 6251 and the associated 1116-AMTs and enter zero on 1040 line 45.
http://apps.irs.gov/app/amt2012/assista ... ution=e3s1
Others have reported on this site not filing 6251 because they didn't owe AMT. But their not owing AMT was after the AMT FTC was taken into account.
The IRS was then kind enough to complete the 6251 form for them. However the IRS did not complete the AMT 1116s for them and so sent them a bill for tax owing.
It may be best to file the 6251 and the associated 1116-AMTs and enter zero on 1040 line 45.
Right! That part I understand....As I mentioned she does not owe the AMT so no form 6251 needs to be sent in, this was verified before the AMTFTC was calculated.
As I plugged the numbers into TaxAct for the regular tax FTC (f1116), the software was completing the 6251 and associated AMT f1116's in parallel - I looked at the numbers and there was no requirement for AMT, as well, the AMT f1116's showed no AMTFTC that would have been used to zero out any potential AMT. There were also no unused credits for carry forward or carry back in future years...
I also verified this by completing 6251 by hand following the instructions, I also went through the AMT form 1116's manually to verify. I followed the steps for NO simplified election.
In addition, I used the IRS's AMT assistant and everything jives with the TaxAct software - no AMT and no 6251!
I don't know that it would be a good idea to send in the 6251 if it's not needed as I'm sure the IRS does not want unrequired paperwork. Although, it may be a good way to prove to them that in fact there is no AMT owing....?
I was just seeking clarification on the questions regarding the AMT simplified foreign tax credit election and what the purpose of the election would be, who would use it etc...
As I plugged the numbers into TaxAct for the regular tax FTC (f1116), the software was completing the 6251 and associated AMT f1116's in parallel - I looked at the numbers and there was no requirement for AMT, as well, the AMT f1116's showed no AMTFTC that would have been used to zero out any potential AMT. There were also no unused credits for carry forward or carry back in future years...
I also verified this by completing 6251 by hand following the instructions, I also went through the AMT form 1116's manually to verify. I followed the steps for NO simplified election.
In addition, I used the IRS's AMT assistant and everything jives with the TaxAct software - no AMT and no 6251!
I don't know that it would be a good idea to send in the 6251 if it's not needed as I'm sure the IRS does not want unrequired paperwork. Although, it may be a good way to prove to them that in fact there is no AMT owing....?
I was just seeking clarification on the questions regarding the AMT simplified foreign tax credit election and what the purpose of the election would be, who would use it etc...