AMT: Credit in Canada?

Peter G Hamilton · Post by **Peter G Hamilton** » Sun Apr 08, 2007 9:52 am

We file in Canada & the US. After doing both countries' returns with the usual tax credits, we have an AMT due in the US. Is this a tax credit or deduction in Canada?
If so how do we enter it onto our Canadian return?

Peter

nelsona · Post by **nelsona** » Sun Apr 08, 2007 10:08 am

Where do you live and where does your income come from?

Peter G Hamilton · Post by **Peter G Hamilton** » Sun Apr 08, 2007 4:35 pm

To Nelson: Re your questions about AMT credit on Canadian returns:
We live in Canada.
Our income comes from:
Canada -65% (capital gains, OAS, CPP, interest, dividends, small pension)
US -30%(Pension, Social Security, Dividends)
Other Foreign -5% (interest, dividends)
{OAS, CPP & Social Security are taxed by Canada, not US}.

Peter

nelsona · Post by **nelsona** » Mon Apr 09, 2007 8:56 am

First off, I was under the impression that IRS had changed some of it's rules to avoid AMT for those using 1116 -- unless you are subject to AMT even before running the 1116s. I will see if I can dig up anything on that.

But for your AMT 'credit'. I would know adjust my credit on the Cdn tax return up to yournew ammount.

You can go back and adjust your 1116s, and since you are subject to AMT, your tax should not change. This will make your 2 tax returns jive.

Peter G Hamilton · Post by **Peter G Hamilton** » Mon Apr 09, 2007 9:17 am

To Nelson:
One of the rules that the US changed is to allow 100% of a FTC rather than 90% in calculating the AMT beginning in 2005. I thought that Canada didn't allow credit for the US AMT because the US did not allow a 100% FTC for AMT. If true then Canada should now allow a credit for the US AMT.
I look forward to anything that you can find about a credit for US AMT on Canadian returns. (and thank-you)

Peter

nelsona · Post by **nelsona** » Mon Apr 09, 2007 10:08 am

I see no reason why AMT would not be fully creditable on your Cdn return, regardless of the changes in US rules. It is a legitimate US tax based on income. Besides, this 90% limit was repealed for the 2005 tax year, not just 2006.

That said, canada does limit its credit on US tax to that which would be paid by a non US-citizen, but this limit is far above AMT in most cases.

Remember, we are talking of the US tax on your US income. FTC only affects the US tax on your foreign income.

I suspect that the AMT you are paying arises from your US income.