AMT credit
Moderator: Mark T Serbinski CA CPA
AMT credit
Last year I had to pay a lot of AMT in the US because I decided to exercise my company options. For my 2005 taxes I will get some of it back, but not everything. In 2006, we are planning to go back to Canada and I believe I will lose the remaining of my credit. But, since we have the green card, can I still file taxes in the US for the next couple of years and claim the AMT credit ?
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote">since we have the green card, can I still file taxes in the US for the next couple of years <hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
With a GC you are <b>OBLIGATED </b> to report to IRS every year, regardless of AMT, or where you live.
Trouble is, you likely won't owe any taxes in US, and if you do, it will be below the AMT threshold anyways, and will not reduce your overall tax burden, as that will gladly be taken up by Canada/Province.
In fact, until the regs were changed for the 2005 tax year, US tax filers living in Canada actaully had to pay MORE AMT, regardless of their Cdn tax rate.
Your best bet at recouping this AMT is if proposed AMT abolishment would take place in 2006, and you could use it then, on income from before your move to canada.
Otherwise your AMT carryforward will be useless until you leave Canada again (or the taxrate in canada become lower than IRS rate).
I wouldn't be holding on to GC simply to recoup AMT.[xx(]
<i>nelsona non grata... and non pro</i>
With a GC you are <b>OBLIGATED </b> to report to IRS every year, regardless of AMT, or where you live.
Trouble is, you likely won't owe any taxes in US, and if you do, it will be below the AMT threshold anyways, and will not reduce your overall tax burden, as that will gladly be taken up by Canada/Province.
In fact, until the regs were changed for the 2005 tax year, US tax filers living in Canada actaully had to pay MORE AMT, regardless of their Cdn tax rate.
Your best bet at recouping this AMT is if proposed AMT abolishment would take place in 2006, and you could use it then, on income from before your move to canada.
Otherwise your AMT carryforward will be useless until you leave Canada again (or the taxrate in canada become lower than IRS rate).
I wouldn't be holding on to GC simply to recoup AMT.[xx(]
<i>nelsona non grata... and non pro</i>
"Your best bet at recouping this AMT is if proposed AMT abolishment would take place in 2006, and you could use it then, on income from before your move to canada."
You mean this would be retroactive (if it happens !) ? I could redo my 2004 taxes in 2006 and get my AMT back ? Can you explain how that would work ?
Thanks.
No, I mean you could use it to reduce your 2006 US taxes on your US income, which if you time your return to canada properly, would not be subject to canadian tax.
I'm assuming that the same income conditions you have in 2005 that allow you to eat back some of the AMT from 2004 would still exist in 2006. You will be filing a return in 2006.
I'm also assuming that if they abolish AMT, there might be some mechanism to use up any carryover, but I might be overly optimistic on that score.
<i>nelsona non grata... and non pro</i>
I'm assuming that the same income conditions you have in 2005 that allow you to eat back some of the AMT from 2004 would still exist in 2006. You will be filing a return in 2006.
I'm also assuming that if they abolish AMT, there might be some mechanism to use up any carryover, but I might be overly optimistic on that score.
<i>nelsona non grata... and non pro</i>
"I'm assuming that the same income conditions you have in 2005 that allow you to eat back some of the AMT from 2004 would still exist in 2006. You will be filing a return in 2006."
That's correct.
We are planning to move back to Canada at the end of June, beginning of July. Since this is a mid-year move, what will be the best way to file our taxes if they decide to abolish the AMT.
That's correct.
We are planning to move back to Canada at the end of June, beginning of July. Since this is a mid-year move, what will be the best way to file our taxes if they decide to abolish the AMT.
You don't have much choice, since you are a GC holder. You report everthing, just as if you hadn't moved.
Then for any Cdn wages you earn, you can choose to exclude them (Form 2555) or take foreign tax credit for the Cdn tax you pay (Form 1116).
For any other Cdn income you earn, you can use the foreign tax credit only.
Any of the common US tax software packages will be able to determine which will yeild lowest US tax, which should result in lowest overall tax too, since you should be trying to structure your arrival to Canada in such a way to minimize the reporting of any US income on your Cdn 'newcomer' return.
The abolition of AMT doesn't have much to do with this. You will either benefit, or you won't.
<i>nelsona non grata... and non pro</i>
Then for any Cdn wages you earn, you can choose to exclude them (Form 2555) or take foreign tax credit for the Cdn tax you pay (Form 1116).
For any other Cdn income you earn, you can use the foreign tax credit only.
Any of the common US tax software packages will be able to determine which will yeild lowest US tax, which should result in lowest overall tax too, since you should be trying to structure your arrival to Canada in such a way to minimize the reporting of any US income on your Cdn 'newcomer' return.
The abolition of AMT doesn't have much to do with this. You will either benefit, or you won't.
<i>nelsona non grata... and non pro</i>