FTC attempt: Running into AMT

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DrYogi814
Posts: 3
Joined: Fri Jun 12, 2020 8:56 pm

FTC attempt: Running into AMT

Post by DrYogi814 » Fri Jun 12, 2020 9:07 pm

Hi there,

I'm a US expat living in Canada for 10 years. I hired an accountant licenced in both countries for 2010 and then copied what she did in subsequent years. She opted for the FEIE that first year because my income was quite a bit below the threshold.

My income has since risen and I am worried I will start owing taxes using the FEIE method. Last year I attempted calculating the FTC but H&R Block software indicated I owed something like $7000 because of the AMT, whereas I could file the FEIE coming just under the limit and owe $0. After fighting with the software and calculations for an entire weekend, I gave up and just took the FEIE. This year, I vowed to spend more time on trying to get the FTC to work but I am still not having any luck.

Income is simple: $112,000 USD. Grand total of $1500 USD in Canadian bank interest, and another $66 USD in US bank interest. That's it. No dependents, no deductions, no rental property. I paid $29,800 USD in taxes to Canada and Googling suggests I would only owe $18k if this income were earned in the US.

Software tells me I owe $1300 USD when I take the FTC. It seems to blame the AMT, but I swear when I looked up the AMT rules in depth last year I shouldn't be running into this.

Does it seem realistic this should be happening at this income level? I read on these forums a couple of posts from years ago indicating sometimes the FTC really isn't the best option even when taxes paid are much higher in the foreign country. Should I just stick with the FEIE and hope the exchange rate stays low enough that I don't owe tax with this going forward?

Thank you for any insight you can provide. I feel as though I'm doing something wrong but I can't figure out what it is.

Carrie

nelsona
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Re: FTC attempt: Running into AMT

Post by nelsona » Fri Jun 12, 2020 9:38 pm

First, I assume you realize you need 3 1116's for your return, one for wages (general), one for your Cdn passive income, and one for your US bank interest (re-sourced by treaty). FEIE only covers wages, so you should always need at least 2 1116's regardless.

It is quite possible that 1116 will yield AMT. You may need to use the AMT version of 1116 to reduce that. It is complicated. I might just stick with 2555 as long as possible.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

DrYogi814
Posts: 3
Joined: Fri Jun 12, 2020 8:56 pm

Re: FTC attempt: Running into AMT

Post by DrYogi814 » Fri Jun 12, 2020 10:30 pm

Okay, thanks. Damn AMT. :-)

I did realize I needed 3 separate 1116s. Was mostly focused on tackling the biggest one since that seems to be where the problem lies.

nelsona
Posts: 16414
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Re: FTC attempt: Running into AMT

Post by nelsona » Sat Jun 13, 2020 8:28 am

As I said, the AMT FTC calculation should take care of AMT.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

DrYogi814
Posts: 3
Joined: Fri Jun 12, 2020 8:56 pm

Re: FTC attempt: Running into AMT

Post by DrYogi814 » Sat Jun 13, 2020 11:33 am

I see. I thought that last year, too. I'll try again. Thank you!

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