Alternative Minimum Tax Credit

In most cases, you will not qualify for this credit unless you previously had to pay the federal AMT and you qualify for the federal AMT credit in the current year. For more information, see the instructions for federal Form 8801 on the Internal Revenue Service website.

To qualify, part of the difference between your prior year “regular income” and “AMT income” (see Alternative Minimum Tax) must have been due to “timing items” as opposed to “exclusion items.”

1. Complete Schedule M1MT, Alternative Minimum Tax, for the current year, even if you are not paying AMT in the current year.

2. Use your current year and prior year Schedules M1MT to complete Schedule M1MTC, Alternative Minimum Tax Credit.

3. Enter the “Allowable Credit” from Schedule M1MTC on the appropriate line of Schedule M1C, Other Nonrefundable Credits.

4. Include all three schedules when filing your Minnesota return (Form M1, Individual Income Tax).

Timing items do not cause a permanent difference between regular income and AMT income. They occur when you must defer a deduction or other tax benefit for your AMT income calculation. You may claim an AMT credit for timing items when your AMT no longer exceeds your regular income tax.

Timing items include federal AMT preferences or adjustments, such as depreciation, depletion, intangible drilling costs, passive activity losses, or incentive stock options.

Exclusion items cause a permanent difference between your regular income and AMT income. Exclusion items are deductions, exemptions, or income subtractions not allowed when calculating and paying AMT.

Exclusion items include personal exemptions, non-Minnesota municipal bond interest, and deductions for gambling losses, home mortgage interest, taxes, and miscellaneous itemized deductions.

For more information, see Minnesota Statute 290.091, subdivision 6.