Hi All,
I'm about to finish my 1040NR return and ran into AMT and as I went through the instructions I am a little unsure.
I am Canadian now living in the US. Less than 183 last year so that's why 1040NR. Anyway, everything looked good until I ran into AMT... I just want to make sure that I understand the instructions correctly. First of all I do not have any itemized deductions and adjustments and preferences. However, my AGI is more than $41700. Since my filing status is married resident of Canada that's the number I have to use for exception amount. Anyway, from the instructions it appears that if my income is more than the exception amount and my filing status is as listed above I have to fill out form 6251.
By doing this I will have extra tax which will reduce the actual amount I would get as refund. It seems to me that no matter what deductions you took or not, if your AGI is beyond the exemption amount for your filing status, you will have to do AMT and pay the extra tax.
Am I correct? The reason I ask is that for a US resident in a similar situation the AMT would not be required. At least that's what I gather using the IRS tool for determining if you have to file 6251 or not.
Any explanation would be appreciated. Thank you all!
1040NR and AMT
Moderator: Mark T Serbinski CA CPA
I would submit the 1040NR as is, and ignore AMT. IRS will let you know if it is required or not.
Might be just another reason why you should file 1040 MFJ
Might be just another reason why you should file 1040 MFJ
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks for replying.
I don't think I will do 1040MFJ as the complications outweigh the benefits in my case I think.
So I will do as advised and not worry about the 6251. The follow up question is if IRS comes back and asks for it would there be some sort of penalty? I see nothing regarding such a thing but wanted to ask. I'm also assuming that if they do, that would reduce my refund then...
I don't think I will do 1040MFJ as the complications outweigh the benefits in my case I think.
So I will do as advised and not worry about the 6251. The follow up question is if IRS comes back and asks for it would there be some sort of penalty? I see nothing regarding such a thing but wanted to ask. I'm also assuming that if they do, that would reduce my refund then...
If you are using the married filing separately tax table, I don't see how you would owe more tax, since that is already the highest punitive tax rate.
Unlike Canada, IRS generally taxes its non-residents at a HIGHER rate than its residents. this might be another indication.
For residents, AMT doesn't kick-in (even if their income is above the threshold) unless they have LOTS of itemized deductions, like BIG state tax and property tax. Otherwise, while the 6521 might be called for based on income, the result is zero, and it is ignored.
I suspect that if you were using software, this wouldn't be an issue.
Again, I would file 1040NR without bothering with AMT.
Unlike Canada, IRS generally taxes its non-residents at a HIGHER rate than its residents. this might be another indication.
For residents, AMT doesn't kick-in (even if their income is above the threshold) unless they have LOTS of itemized deductions, like BIG state tax and property tax. Otherwise, while the 6521 might be called for based on income, the result is zero, and it is ignored.
I suspect that if you were using software, this wouldn't be an issue.
Again, I would file 1040NR without bothering with AMT.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Never focus on refund. Focus on total tax accrued. A large refund simply means poor planning and misplaced generosity.
You always want to reduce your TAXES.
I understand your decision based on complexity. I just hope that you have taken care of the items that would have made a 1040 more complex (which would be RESP, TFSA and non-retirement accounts) before Jan 2016, otherwise you will face that complexity this time next year and would have been better of tax-wise dealing with it now.
You always want to reduce your TAXES.
I understand your decision based on complexity. I just hope that you have taken care of the items that would have made a 1040 more complex (which would be RESP, TFSA and non-retirement accounts) before Jan 2016, otherwise you will face that complexity this time next year and would have been better of tax-wise dealing with it now.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Hello,
That's a fair statement to make. To your point, I do not have a TFSA, never did. The only accounts in Canada is a couple of my checking accounts, RESP for my children and RRSP for both me and my wife. No house, no rental property, no other financial accounts.
I kept all of them as I did not want to take the penalty for collapsing them. Also, I'm not doing any activity in these accounts at all, no contributions and/or withdrawals of any kind to any of them.
Also, this year my checking accounts will have minimal sums of money as well and the only thing they really be used for are occasional trips to Canada, paying my wife's life insurance and if I have to pay taxes this April (which it looks like I will).
Anyway, thank you for your answer! :)
That's a fair statement to make. To your point, I do not have a TFSA, never did. The only accounts in Canada is a couple of my checking accounts, RESP for my children and RRSP for both me and my wife. No house, no rental property, no other financial accounts.
I kept all of them as I did not want to take the penalty for collapsing them. Also, I'm not doing any activity in these accounts at all, no contributions and/or withdrawals of any kind to any of them.
Also, this year my checking accounts will have minimal sums of money as well and the only thing they really be used for are occasional trips to Canada, paying my wife's life insurance and if I have to pay taxes this April (which it looks like I will).
Anyway, thank you for your answer! :)