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Conference nyoss1::market_investing

Title:Market Investing
Moderator:2155::michaud
Created:Thu Jan 23 1992
Last Modified:Thu Jun 05 1997
Last Successful Update:Fri Jun 06 1997
Number of topics:1060
Total number of notes:10477

43.0. "Child Support and AMT" by RT93::HU () Wed Feb 05 1992 16:25

    
    This is for a friend of mine about tax questions:
    
    He has child support expenses $3500 last yrs and should able to get
    deduction amount for $400 something.
    
    However, since he has Capital Loss (by selling stock), and file
    schedule D, he need to fill out AMT (Alternate Minimum Taxes) form,
    accoding to 1991 1040 IRS book.
    
    After AMT calculation, he get 0 from AMT form, 1040 form said get less of the AMT form
    and child support form for his child support deduction. In his case,
    he get zero deduction of child support.
    
    He's furious, why he didn't get any child support deduction ?
    
    Did he trigger AMT taxes rule here ? Any change from 1990 ?
    
    Michael...
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43.1Get a CPAMINAR::BISHOPWed Feb 05 1992 17:2213
    1.  The whole point of the AMT is to ensure that the government is not
    	embarassed by millionaires who wind up with no tax liability.  So
    	it's basically a simple tax applied to all income above a high
    	threshhold, no execptions, no deductions.  In other words, the
    	government makes the rules and they don't own anybody a deduction.
    	Fury should be directed at your Congressperson or President--send
    	them a letter.
    
    2.	If your tax situation is complex enough to put you in the category
    	of people who pay AMT, you should get professional help in doing
    	your taxes.  You'll probably save the fee.
    
    		-John Bishop
43.2???SSBN1::YANKESWed Feb 05 1992 18:5513
    
    	Re: .0
    
    	I'm certainly no expert on the AMT (thankfully!) and do agree that
    your friend should get a tax expert's opinion.  But, if I may ask, why
    does he think that he has to file the AMT?  You said that he has to
    file it since he has a capital loss from the sale of stock and has to
    file Schedule D.  I just happen to have my 1040 instruction book here at
    work today, and read over the section that describes when the AMT
    should be filed and nowhere did they mention anything about capital
    losses or using Schedule D.
    
    							-craig
43.3D + 2441 = 6251, every time.CSCOAC::SOVEREIGN_Sbut once a knight is enough(?)Thu Feb 06 1992 12:4521
    Hopefully, you meant Childcare Expenses, NOT child support.  "Child
    Support" is NEVER deductible.  Childcare Expense may be used for a
    childcare "credit".  If you have "Childcare credit" (form 2441) and you
    also file a schedule D, you have indeed found a combination that
    REQUIRES the Alternative Minimum Tax (Form 6251) to be filed.
    
    The 6251 might limit the 2441 credit amount.  In english (sort of), the
    logic to this is that the 2441 credit cannot lower your "total tax due"
    below the 6251 "minimum" amount.  If the 2441 credit is limited to
    zero, then there's probably some additional AMT tax due on the 6251,
    which you didn't mention.  Sounds to me like there's been a mistake in
    either reading the instructions or filling in the forms.  Check it
    again, to be sure.
    
    The 6251 DID change again this year, both the AMT percentage and the
    filing requirements.  Filing a 6251 if you have a 2441 and a D is NOT
    new this year.
    
    Steve
    (Who, by the way, is now officially "short" and will be gone in a
    couple of weeks)
43.4Never say NEVERHSOMAI::PALOTarzan was a bluesmanFri Feb 07 1992 02:038
NEVER is geographical in nature -- it was a pleasure the years I spent
in France to be able to deduct child support and now am very dismayed
at not being able to -- there should be some way to work out something
with a special trust or something ... hmmm - I'm going to ask my CPA
about that.

	Rikki
43.5uhhh...mumble...CSCOA1::SOVEREIGN_Sbut once a knight is enough(?)Fri Feb 07 1992 12:065
    Oops.  Please accept my abject apologies for being provincial...I'm
    kneedeep in IRS stuff for the last few weeks, and sometimes I don't
    remember to take my blinders off.
    
    Steve
43.6VAXWRK::SWARDCommon sense is not that commonFri Feb 07 1992 15:327
    
    Re .4
    
    But remember Rikki, if you where on relocation the only one that
    benefitted from your deductions was DEC. (Big rathole)
    
    Peter
43.7Final AnswerRT95::HUMon Feb 10 1992 12:5241
    
Re: .2

>    your friend should get a tax expert's opinion.  But, if I may ask, why
>    does he think that he has to file the AMT?  

Because he fill schedule D and Childcare expenses.

>    work today, and read over the section that describes when the AMT
>    should be filed and nowhere did they mention anything about capital
>    losses or using Schedule D.
 
He showed me the pages described that under 1040 booklet.

    Re: .3
    
>    Hopefully, you meant Childcare Expenses, NOT child support.  "Child
>    Support" is NEVER deductible.  Childcare Expense may be used for a
>    childcare "credit".  If you have "Childcare credit" (form 2441) and you
>    also file a schedule D, you have indeed found a combination that
>    REQUIRES the Alternative Minimum Tax (Form 6251) to be filed.
 
Yes, it's my mistake. It's indeed Childcare Expenses, not Child Support.
And it's D + 2441 trigger the AMT (6251) filing.
   
>    which you didn't mention.  Sounds to me like there's been a mistake in
>    either reading the instructions or filling in the forms.  Check it
>    again, to be sure.
>    The 6251 DID change again this year, both the AMT percentage and the
>    filing requirements.  Filing a 6251 if you have a 2441 and a D is NOT
>    new this year.
 
Steve, you are correct. He found the problem, by using the old AMT percentage
from last year's form, because he can't get this yr form yet.
When he used old percentage, he surprised he can't get any deduction from
Childcare expenses at all, and he wondering whether it's waste of time to fill
the 2441.

Thanks for your all.
Michael..
    
43.8HSOMAI::PALOTarzan was a bluesmanWed Feb 12 1992 22:497
re: .-2  No, I profited because I was "local" not a temporary "relocatee".
It made a BIG BIG difference to my foreign taxes -- such that I paid roughly
0.5 what I paid in the States.  It is simply a rip-off not to be able to 
deduct it in this country.

	Rikki