# Mystery Connection between IRS forms 1116 and 6251



## rainlord (Apr 15, 2016)

Hi! New on these forums and I have some US-expat IRS-related tax questions that is confusing me (hope this is the right place!). 

I used to have a local firm prepare my US foreign taxes, but they really overcharged me last year  and I decided to try to do them myself this year to save money. It's going OK using the old returns as templates, but a few things confuse me, for which I would love to get some insight.

*Question 1 (2 questions):*
1a. My previous year (2014)'s return contains four 1116's (foreign tax credit). 2 for general income (salary), 2 for accrued income (bank interest). They are basically identical except that one set uses the standard deduction ($6,200 in 2014) and one set doesn't. I don't understand why this is done this way and I can't find any documentation explaining it. Can someone explain why I need(ed) an additional set of 1116's and why they skip the deduction in one set vs. including it the other?

*1b. (Follow up to 1a).*
On the set of 1116's that don't use the deduction, the tax guys have filled in line 1116's line 20 with the value from form 6251, line 31 (Alt. Min. Tax). This I also don't understand, as it seems the 1116 line 20 instructions are quite clear as to where the value should come from and it doesn't seem to mention 6251 as an option at all. I'm clearly missing something... 

*Question 2:*
The tax guys filled out various "Supplemental forms" (worksheets) including one for "Foreign Tax Credit Carryovers - General Income". I'd post a picture but my post count is too low, it basically looks like a very basic table. Here the strange thing to me is that the column for "Foreign Tax Credit Used" doesn't only contain the calculated value for that credit (which is quite a bit lower), but a sum of that value + the value of 1116's line 22 (or 24). So the question is, why do they calculate total_foreign_tax_credit_used = calculated_foreign_tax_credit + 1116_line_22 to make up this value? 

I'd be perfectly happy with someone pointing me to IRS documents explaining any or all of these and I'll read up on the details, I just can't seem to find any documentation to these things.

Thanks in advance!
Jack


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## Bevdeforges (Nov 16, 2007)

Try IRS publication 514 for the Foreign Tax Credit questions, and this page on the Alternative Minimum Tax: https://www.irs.gov/uac/Form-6251,--Alternative-Minimum-Tax---Individuals

It used to be that claiming the FTC at a certain income level made you subject to the AMT, but I believe they have raised the income level in recent years. However, the instructions for the form 6251 should give you some sort of explanation as to when the AMT kicks in.
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

Many people have to prepare Alternative Minimum Tax-related forms -- in effect a second, whole copy of your tax return with a different calculation -- even if the AMT doesn't apply, in order to prove the AMT doesn't apply. This is a key area where tax preparation software is quite helpful since it'll spit out the forms for the AMT run.


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## carolm (Dec 4, 2013)

The instructions for Form 6251 regarding the foreign tax credit are utterly baffling to me. the instructions for Line 32 say:
Step 1. Use a separate AMT Form 1116 for each separate category of income. Write “AMT” and specify the category of income in the top margin of
each Form 1116. When applying the separate categories of income, use the applicable
AMT rate instead of the regular tax rate to determine if any income is
“high-taxed.”
OK, fine, but Form 1116 doesn't ask for information about a tax rate, AMT or otherwise. So how is the "AMT Form 1116" supposed to be any different from the regular one?


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## BBCWatcher (Dec 28, 2012)

It's not often that the AMT Form 1116s will be different.

The AMT is one case among many when online or offline tax preparation software, even free software, is well worth using.


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