AMT Credits are Now Refundable Under the New Tax Law
The Tax Cuts and Jobs Act brought historic changes to the US tax system and one major change that has not received much attention is the Alternative Minimum Tax (AMT) credit as it relates to corporate taxpayers.
AMT credits come about when a corporation is subject to AMT in a certain year- i.e. their AMT is calculated to be greater than their regular tax. When the corporation paid the AMT they were granted a credit in the same amount to be used in future years to offset regular tax when their regular tax exceeded their AMT.
Under the Tax Cuts and Jobs Act, the corporate AMT has been eliminated for tax years after December 31, 2017. Congress did not want to penalize taxpayers that had accumulated AMT credits in prior years so they set up a provision in the new tax law to allow corporate taxpayers to get a refund of these AMT credits.
How it works is that for tax years starting in 2018 and after you can offset regular tax liability with AMT credits up to the full amount of your AMT credit. If your AMT credit exceeds your regular tax liability, the AMT credit becomes refundable up to 50% of the remainder of the credit. Any amount remaining will carry-forward and the process repeats until all of the AMT credit is used up, or the 2021 tax year in which all remaining AMT credit becomes refundable.
Calculating the proper AMT credit to apply to your regular tax and any refundable amount can be complicated, so please consult with your professional tax advisor if you have questions on the applicability of these rules.
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