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Credit for Prior Year's Minimum Tax

If you paid Alternative Minimum Tax (AMT) previously, or you had an eligible minimum tax credit carryforward, you may be able to claim a tax credit on Form 8801, Credit for Prior Year Minimum Tax - Individuals, Estates and Trusts.

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This IRS form, Credit for Prior Year Minimum Tax is used to compute the amount of any credit available for payment of alternative minimum tax in prior years.

The minimum tax credit is allowed for the amount of adjusted net minimum tax for all tax years reduced by the minimum tax credit for all prior tax years. Any unused credit may be carried forward indefinitely as a credit against regular tax liability. It is limited, however, to the extent that the regular tax liability reduced by other nonrefundable credits exceeds the tentative minimum tax for the tax year. The credit may not be used to offset any future AMT liability.

For noncorporate taxpayers, the adjusted net minimum tax is the taxpayer’s AMT liability reduced by the amount that would have been the taxpayer’s AMT liability if only certain specified adjustments and preferences had been taken into account. The adjustments include those related to standard deduction, personal exemptions, medical and dental expenses, miscellaneous itemized deductions, taxes, and interest expenses. The preference items include certain depletion deductions exceeding adjusted basis, tax-exempt interest on specified private activity bonds, and the exclusion of gain on the sale of qualified small business stock.

This sounds complicated because it is. Consult your tax advisor for details on claiming the AMT credit.


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