Credit for Prior-Year Minimum Tax – Form 8801
Editor’s Note: Alternative Minimum Tax (AMT) is a separate tax. AMT is imposed in addition to your regular tax. AMT is triggered by two types of adjustments—deferral and exclusion items. Deferral items can create a minimum tax credit (also called the AMT credit). Read on to find out more information about how you can apply the credit for prior-year minimum tax with Form 8801.
Credit for Prior-Year Minimum Tax? More Info On AMT Credit Carryforward Option
The Prior-Year Minimum Tax Credit lets you get back money you paid as an AMT in a prior year. You can only claim this credit in a year when you don’t have to pay AMT. You can’t use the credit to reduce your AMT liability in the future. However, AMT credit carryforward is granted for unused portion of the credit to future years.
When to Use IRS Form 8801
Use IRS Form 8801 for these purposes:
- If you had an AMT liability for something other than an exclusionary item (such as a deferral item)
- To calculate the minimum tax credit
- To calculate the amount you can carry over to future years
Deferral items include:
- Incentive stock options exercised and not sold
Form 8801 Instructions
Refer to the instructions for completing Form 8801 from the IRS.
Where to Go to Get Help With The AMT Credit
You can claim the standard deduction or itemize deductions to lower your taxable income. The standard deduction lowers your income by one fixed amount. On the other hand, itemized deductions are made up of a list of eligible expenses. You can claim whichever lowers your tax bill the most.
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