Excess advance premium tax credit repayment. Attach Form 8962

[astral101]

Hi. I have printed out the 2023 tax return before filing (haven't filed yet) and see this line with the amount $5142 at the end:  Excess advance premium tax credit repayment. Attach Form 8962 ---------------------- $5142

Can someone explain what this means?

Lastly, maybe by error last year with an income of 41,000 I might have selected AMT. I see the following message when trying to figure out the foreign income tax credit:

Your 2022 return shows that you previously decided to use AMT adjustments to determine your taxable income and deductions on the Form 1116 you filled out for AMT purposes. You must continue to use this method. You should only answer No if last year's decision was an error, and you did not enter AMT adjustments in the first year you were required to file Form 1116 for AMT purposes. (Not using AMT adjustments is known as the Simplified Method.)

Will this now be an issue? How can I check if I did not enter AMT adjustments in the first year I was required to file Form 1116 for AMT purposes?

[astral101]

Any help with this, please?

[DoninGA]

@astral101 When you entered the Form 1095-A the information on the premium tax credit you received was entered on Form 8962.  Based on your income and filing status the excess PTC would have been reported on the 8962 Line 29.  This amount flows to Schedule 2 Line 2.  The total amount from Schedule 2 Line 3 flows to your federal tax return, Form 1040 Line 17 as a tax liability.

[astral101]

Sorry, I am not an accountant and don't quite follow. Line 17 says $4,575. This is tax we now owe? How? Our income last year was barely 41K and we paid tax to Canada as well and claimed a foreign tax credit because of this.

How do I check if we "did not enter AMT adjustments in the first year you were required to file Form 1116 for AMT purposes"

Issue: By error it appears last year with an income of 41,000 we might have selected AMT. I see the following message when trying to figure out the foreign income tax credit:

"Your 2022 return shows that you previously decided to use AMT adjustments to determine your taxable income and deductions on the Form 1116 you filled out for AMT purposes. You must continue to use this method. You should only answer No if last year's decision was an error, and you did not enter AMT adjustments in the first year you were required to file Form 1116 for AMT purposes. (Not using AMT adjustments is known as the Simplified Method.)

[astral101]

Our 2022 tax return says $300 under line 29 of Form 8962.

So we are forced now to keep with the AMT method unless we request a change from the IRS? This is driving me crazy. Just need taxes done and filed...it's turning into a nightmare.

[Mike9241]

if you choose the simplified method in 2022 (see note below - because the election may have been made in an earlier year) there will only be 1 form 1116 because the FTC would be the same for both regular tax and AMT tax. If there are two 1116s then you selected the AMT method.

Note: You must make the election (to use Simplified Method) for the first tax year after 1997 for which you claim an AMTFTC. If you don’t make the election for that year, you may not make it for a later year. Once made, the election applies to all later tax years and may be revoked only with IRS consent.

so the question becomes did you elect the simplified method for the first year after 1997 that you could/would have made the election. if not, then you should have been on the AMT method for that year and all subsequent years. if so, then as a minimum your 2022 return would be wrong if you properly elected the simplified method in an earlier year but used the AMT method. It should be amended. Other open years may also need to be amended if you were properly on the simplified method but used the AMT method. 

To request a change to the simplified method for Alternative Minimum Tax (AMT) purposes, you need to follow these steps:

1. Complete Form 3115: This is the Application for Change in Accounting Method. You can find the form and detailed instructions on the IRS website¹.

2. Attach Form 3115 to Your Tax Return: For automatic change requests, attach the completed original co...².

3. File a Copy with the IRS National Office: Send a copy of your signed Form 3115 to the IRS National Office. This can be done via mail, fax, or encrypted email².

4. Follow Specific Instructions for Your Situation: Depending on your specific circumstances, there may be additional steps or considerations. For example, if you are a corporation, you may need to refer to the instructions for Form 4626³.

If you need more detailed guidance or have specific questions about your situation, consulting a tax professional or the IRS directly can be very helpful.

[astral101]

Thank you. Is there a way to check what I chose for 2022 (AMT vs simplified)?