No tax credit for Tracy

Yep. I understand the author represents the district that includes Flint, MI.

 

It's ok to vent.

Now enjoy your new car!!

Ken

 

No problem.
I still hope it will turn out that you get the credit.

 

Tracy,

I think the reason that the tax break is not available for you is inherent to how AMT works, not necessarily the hybrid credit itself. AMT was originally designed to make sure that the uber-rich didn't find a way to finegel there way out of paying any taxes. So the AMT is exactly what is says, the MINIMUM amount of taxes you can get a way with based on your income. If you itemize your taxes, include in an extra $3150 tax credit, and you go below the AMT value, well, you can't pay less the AMT!

Now, I've read a few things stating that you can take PART of the tax credit if you are hit with AMT, but to be honest, that's just hearsay at this point, and I'd verify that with your tax accountant. Maybe even get a second opinion as well. Your accountant, by your description of your situation may be, well, just a tad flaky.

Thant being said, I agree that the AMT laws need a major revision. I read that starting in 2007, individuals making around $70000 may get hit by AMT. Maybe that's a kings ransom if you live in rural Arkansas, but if you live in a major metropolitan area such as DC, LA, NY, Phily,etc, that's really not a huge sum of money. Yup, that would put you firmly in the middle class, no doubt about it, but this law was designed to affect the VERY affluent, not middle class folks.

All the government really needs to do is just retroactively index the AMT to inflation, and that should probably fix the problem.

Peace,
Cosmo

 

The credit will definitely NOT reduce your tax liability below your AMT.

Page 1419, beginning with line 17 of the Energy Policy Act of 2005.

"(2) Personal credit.-The credit allowed under subsection (a) (after the application of paragraph (1)) for any taxable year shall not exceed the excess (if any) of -
"(A) the regular tax reduced by the sum of the credits allowable under subpart A and sections 27 and 30, over
"(B) the tentative minimum tax for the taxable year.

Tax Credit and Tax bracket

 

This brings me back to an earlier example of federal taxes under a certain income. The government has designed a way to make sure the well to do cannot reduce their taxes to zero. The government also has designed a way for the non well to do to reduce their federal taxes into the negative (earned income credit). By negative, I mean getting back more than you paid.

All hail class politics.

 

I was not insinuating that it would. But based on you quote from the Energy act, it MAY work like this:

Lets say, based on your income, your AMT is set at $10,000. After you do all your tax calculations with the exception of the hybrid credit, you owe Uncle Sam $12,000. Now you add in a Hybrid tax credit of $3000, which would take you to below the AMT value. You still owe the Government 10K, so the hybrid tax credit is $2000 in that case. Quite possibly it's obvious whether that is the case or not, but I just ain't seein' it. I have trouble reading legalese at times.

Peace,
Cosmo

Oh yeah, I hate to say this, I by no means wish to trivialize Tracy's situation, but considering I grew up poor enought that we had to worry about having a roof over our head at times, I'm just NOT feeling your pain. Sorry, I just have to add in my two cents, don't mean to be rude.

 

As your smallest AMT is $0 and the tax credit cannot reduce your tax liability below your AMT, it therefore cannot bring your tax liability negative.

 

Thanks for your clarification.
The situation you present is correct.
The credit can reduce your tax liability to your AMT giving you, in effect, a partial credit benefit. B)

 

Best of luck!

 

You might try deferring income somehow, at least until next year. You might even be able to work something out with your employer. I'm an accountant, though my knowledge of individual taxes (outside my own) and especially the AMT is minimal. Deferrals are your best bet, but you might also try checking out some deductions. Charitable contributions are always a plus.

 

Not to get picayune or anything, but:

You make too much money and your father kick your mother about too much. When I grew up we we're so poor we had to use Hamburger Helper Helper. See the difference?