# Alternative Minimum Tax - Foreign tax credit?



## AlexDad

Hi All:

Just joined the Forum. My son is a US/UK citizen living and working full-time in the UK.
I have been doing his US tax return for a number of years but this year I am encountering a new problem. Various factors have contributed to his income increasing such that he appears to run afoul of the infamous US Alternative Minimum Tax (AMT). I believe that the problem can be corrected by an AMT credit called the 
AMT-Foreign Tax Credit (AMT-FTC). Problem is, even though I consider myself a reasonably smart guy (!!!), I am going crazy trying to understand the IRS instructions for calculating the AMT-FTC. Does anybody know precisely how to calculate AMT-FTC and if so would you please try to provide an example or a reference to AMT-FTC for Dummies?


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## Bevdeforges

As you'll see, I've moved your question over to our Expat Tax section, since it will probably be of interest to many US taxpayers living overseas. (Also changed the title of the thread a bit to draw attention.)

The AMT-FTC seems to be "explained" in the instructions for line 32 of the AMT form (form 6251) but I'll agree with you that the explanation doesn't exactly shed any light on what they're trying to accomplish. Just to add to the confusion, there appears to be a bad link on the IRS website, so that the only instructions I can find for form 6251 are the draft ones for 2012. 

Let's see if we can flag down anyone here who has dealt with the AMT recently and see what they can tell us!
Cheers,
Bev


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## AlexDad

Bevdeforges said:


> As you'll see, I've moved your question over to our Expat Tax section, since it will probably be of interest to many US taxpayers living overseas. (Also changed the title of the thread a bit to draw attention.)
> 
> The AMT-FTC seems to be "explained" in the instructions for line 32 of the AMT form (form 6251) but I'll agree with you that the explanation doesn't exactly shed any light on what they're trying to accomplish. Just to add to the confusion, there appears to be a bad link on the IRS website, so that the only instructions I can find for form 6251 are the draft ones for 2012.
> 
> Let's see if we can flag down anyone here who has dealt with the AMT recently and see what they can tell us!
> Cheers,
> Bev


Thanks, Bev.
You are right about the IRS instructions. Can't make head nor tail of them.


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## Crazyeelboy

I have been pounding out this issue for years - fortunately, though, I don't have much (if any) AMT, so any solutions I have come up with are largely theoretical as they don't make a big difference in the end result. Here's my big (massive) problem:

I don't know what to do for entering the correct amount for foreign earned income (not including passive income of any sort) amount in line 1a of the AMT 1116. I am not using the simplified limitation election and the "instructions" are useless as they simply say use "income and deductions which are allowed for the AMT and attributable to foreign sources..." 

I can see three options for finding the right amount:

1) Use the regular gross income as reported on the regular 1116 (like the simplified limitation election, but it seems the main differences are not about earned income);

2) Use the AMT Taxable Income amount on Line 28 of 6251 as a basis and take out income other than applicable foreign source income; or

3) Use the amount generated in the Foreign Earned Income Tax Worksheet for Line 31 of 6251.

What do you think or do with this?

Mike


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## Mona Lisa76

All the more reason why I rely on my accountant. She costs me an extra 1500 pounds per year which amounts to effectively a further tax on tax but I find it so baffling and concluded that their system essentally forces all but the simplist cases to rely on professional help. I deeply resent this but agree with Bev that I don't see things improving for expats any time soon...it's the price of US citizenship. No one forced me to move to England 23 years ago so gotta like it or lump it


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## graubart

Good tax software (US Turbotax Basic for one) will fill out 1116 forms including AMT-1116. Unless your taxes are complex the forms aren't difficult to complete but are difficult to explain. Let the software do it for you one year then, if you are so inclined, you can probably do it manually thereafter.


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