AMT - Makes No Sense and Why Are We Getting This??

[Stockholm Sweden]

I’m sorry, but I don’t understand AMT. In Tax Year 2020 and for all previous years, we did not/not receive any AMT.  Tax Year 2021 Turbo Tax Deluxe software (Tax Year 2020 we used Turbo Tax Premier as we had and sold rental property and in Tax Year 2021 were informed via this community we could use Turbo Tax Deluxe as we no longer own rental property) it indicates was have AMT of $8,158 with “Credit for Prior Year AMT” - we do not understand this as this new AMT (Never before have we ever had this and do recall ever having AMT “credit”?!) it decreased our tax liability now saying we are getting a refund of $3,778.

This makes no sense as we’ve never received a refund for over 15 years of tax filings as taxable income has always exceeded $110,000 per year. And now for the first time ever since married we’re getting a refund (no children no other deductions other than standard deductions and x2 people for annual federal/state withholdings throughout the year)!!?? Something is not right.

Also, with this “Alternative Minimum Tax (AMT)” a Form 6251 is required that won’t be available until 02/24/2022 and also a Form 8801 not available until 03/17/2022 - so much for starting taxes and eFiling early as now we have to wait until 03/17/2022 until all the forms are available to us - does anyone know what’s going on with this? Assume these 2 forms will correct tax calculations to where they should be and no/no AMT?

Can someone please explain before we file and get audited with the IRS thinking we’re trying to cheat them, thank you.

[ColeenD3]

Please see Form 6251 in this LINK. Some lines that could trigger AMT are:

• k) Disposition of property (difference between AMT and regular tax gain or loss)
• l) Depreciation on assets placed in service after 1986 (difference between regular tax and AMT) .
• m) Passive activities (difference between AMT and regular tax income or loss) 
• n) Loss limitations (difference between AMT and regular tax income or loss) .

There are several other line items that may apply to your situation.

[Stockholm Sweden]

Thank you, ColleenD3, for the quick and informative response.  Much appreciation for your expertise!  🙂

Sorry to admit, we're still confused as some of my questions still weren't answered - none the less, thanks for providing the form.  As we're not tax experts we use Turbo Tax to do all of these calculations for us in the software - we still do not have a clue what to do and now a waiting game until March 17 for the actual forms are released and added (software update/forms update) to the Turbo Tax Deluxe so the 'software' does the work. 

We were informed it'd be okay going from Premier to Deluxe (as we no longer have a rental property disposed of in Tax Year 2020); however, not sure that's accurate - we may just download Premier to see if it changes the outcome - because, we always owe taxes, never ever receive a refund. 

For us to figure out what may have triggered the AMT, well, then why do we need Turbo Tax as it's supposed to make taxes easy, not harder.  Thank you. 

[LawyerCPA]

SAME THING:  Might be an Error in the TurboTax Software:  An AMT FORM (6251) is being generated incorrectly--we rent our home during the year but live in it more than 14 days--hence, the passive loss rules do NOT apply to our rental losses.  Yet, TurboTax is generating a Form 6251 and showing different calculations for Passive Losses: Regular Tax v. AMT...Must be a software error.  Thanks all.

[Mike9241]

it might help if we knew which lines on 2a-t and 3 on the 6251 had amounts. 

[LawyerCPA]

The line for "Passive activities," 2m

[Mike9241]

we can't see your return. I would agree that the rental alone probably should not be generating  6251 based on what you provided. the practical solution is to contact support and share the return with them. this will allow them to actually view your return and entries.

[LawyerCPA]

Thanks Mike; yes, I paid for "Live Support" and TurboTax is referring the issue to an AMT Specialist after the Tax Specialist and I discussed the issue at length and found no resolution.  Either it's a programming error in TurboTax OR the AMT rules/regs/court rulings somehow deem the NON-passive losses of renting-one's-own-home pursuant to Instructions for Form 8252  (i.e., the dwelling where one lives for more than 14 days during the year) to nevertheless be "passive" for AMT....Other TurboTax customers may be getting incorrect results and erroneously paying the AMT... will keep you "posted"....Thanks again.

[LawyerCPA]

RESOLVED:  I upgraded to "Live Support" and heard back within a day from TurboTax's AMT Specialist Marty (from Colorado), a CPA with 40+ years tax experience and he figiured out how to enter prior-year nondeductible rental expenses so that they are NOT read as "passive" losses by the program.  As originally noted, passive loss limitations do NOT apply to rental losses when you rent out your own dwelling as long as you live there 14+ days annually (or greater than 10% of the time rented).