AMT Credit - Prior Year Minimum Tax
ProSeries Professional
This page is reserved for information about changes and impacts from AMT laws. We will update this information as it becomes available. Check back periodically to obtain the latest information.
Current Status as of 1/2/2008
The Tax Increase Prevention and Reconciliation Act of 2006 (TIPRA) increased the AMT exemption amounts for individuals, but did so only for the 2006 tax year. Under previous law, AMT exemption amounts for 2007 revert to the levels that were in effect for tax year 2000. Additionally, TIPRA provided that for 2006, the total of most nonrefundable personal credits may offset both regular tax and AMT. By contrast, the total of most nonrefundable personal credits for 2007 generally can't exceed the excess of regular tax liability over tentative minimum tax.
On Wed, Dec. 27, 2007, President Bush signed the House legislation that provides a one-year patch to the Alternative Minimum Tax.
The IRS announced later that day that the upcoming tax season is expected to start on time for everyone except certain taxpayers potentially affected by late enactment of the Alternative Minimum Tax "patch." Following extensive work in recent weeks, the IRS expects to be able to begin processing returns for the vast majority of taxpayers in mid-January. However, as many as 13.5 million taxpayers using five forms related to the Alternative Minimum Tax (AMT) legislation will have to wait to file tax returns until the IRS completes the reprogramming of its systems for the new law.
The IRS has targeted Feb. 11, as the potential starting date for taxpayers to begin submitting the five AMT-related returns affected by the legislation. The February date allows the IRS enough time to update and test its systems to accommodate the AMT changes without major disruptions to other operations related to the tax season. As the IRS has said previously, it will take approximately seven weeks after the AMT patch was approved to update IRS processing systems completely.
The February delay caused by the AMT patch will affect taxpayers using any of these five forms:
- Form 8863, Education Credits.
- Form 5695, Residential Energy Credits.
- Form 1040A's Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers.
- Form 8396, Mortgage Interest Credit.
- Form 8859, District of Columbia First-Time Homebuyer Credit.
While these five forms require significant additional reprogramming due to the AMT patch, the IRS has been able to reprogram its systems to begin processing seven other AMT-related forms, including Form 6251, Alternative Minimum Tax - Individuals. Taxpayers filing these seven forms should not experience delays in filing, and the IRS expects to begin processing those returns starting on Jan. 14.
Electronic returns involving those five forms will not be accepted until systems are updated in February; similarly, paper filers should wait to file as well. All other e-file and paper returns will be accepted starting in January. The IRS urges affected taxpayers to file electronically in order to reduce wait times for their refunds. E-file with direct deposit gets refunds in as little as 10 days, while paper returns take four to six weeks.
The IRS has created a special section on IRS.gov to provide taxpayers with additional information and copies of updated forms affected by the AMT. In recent days, the IRS has posted updated copies of all forms affected by the late enactment of the AMT patch by Congress.
The IRS is also working closely with tax professionals and the tax preparation software community to make sure they can help taxpayers with all of the latest developments on the enactment of the AMT patch and other tax changes.
IR-2007-209, Dec. 27, 2007: http://www.irs.gov/newsroom/article/0,,id=176948,00.html
Search the ProSeries help for "Alternative Minimum Tax" to review helpful information about what AMT is and how it works.
Whether a fix, patch or nothing happens to the current state of the Alternative Minimum Tax, be sure to carefully review your client returns to ensure you have properly handled the implications.