AMT and Equity Compensation
Alternative minimum tax, nonqualified stock options, incentive stock options and other forms of equity compensation.
AMT, NIIT, and kiddie tax
Posted by: heiho, February 21, 2015 05:18AM
I have a few questions I hope the tax gurus out there can help me with. Our taxes are more complicated this year, and I want to make sure I am on the right track.

1. This past year my husband received a big chunk of income from consulting that pushed us over into owing AMT. I think I have done the calculations correctly, but want to check since we don't have the usual triggers for AMT that get widely discussed.

With MAGI of $292,295 (of which $40,687 is CG and qual div), and only $2437 of AMT-eligible deductions, I ended up with total AMT tax of $58,516 (an excess of $1457 over regular tax). Is this reasonable? I am concerned since Taxcaster predicted AMT of only $81 (though it is listing more total deductions than I input).

2. I filled out form 8960 (NIIT), but made no adjustments to the investment income as we don't have a state income tax. Are there other common ways to reduce the income listed here? We just have common variety interest, dividends and capital gains from mutual funds. Is there any adjustment to be made based on the fact that AMT was paid? It seems like we are getting taxed extra twice on this income.

3. My son's UTMA generated slightly more than $2000 in investment income and so we will have to pay the kiddie tax. I have filled out 8615 in the past, but want to know how the AMT and NIIT will affect that calculation. ie will the excess be taxed at the AMT rate? Will the excess be subject to the NIIT?

Thanks in advance. Next year I think it may be time for a CPA...

Re: AMT, NIIT, and kiddie tax
Posted by: kaneohe, February 21, 2015 03:34PM
1) you might try Taxcaster again. Using your inputs w/std deduction, I got Regular tax of 58340 and AMT of 1080. I have found that Taxcaster acts stupid at times and if I go back later, I get the result I expect. No idea why.

Perhaps also try the HR Block tax calculator (google for it). I got Regular tax of 58339 and AMT of 1141. Don't know why it's different .....perhaps one AMT exemption has not been updated?

The regular tax is probably less than yours because you had interest that you did not quantify .

2) Find the instructions for 8960 and peruse those for line 9 . I doubt you will find anything to use but it's worth a try. You are only being taxed by the Feds and not the state on that income so I don't know why you feel you're being double taxed.

Re: AMT, NIIT, and kiddie tax
Posted by: heiho, February 21, 2015 06:34PM
Thanks for your response. I will try the HR Block calculator, but I think I must be within range. I guess I felt I was being taxed double because the AMT is an extra tax due to increased income, and now the NIIT is yet another tax due to the increased income. These are new for us, so it stings a bit.

Do you know if we will have to address the NIIT with the kiddie tax calculation? ie if the parent had to pay NIIT, then does the excess investment income for the child get subject to that tax, as well? (The excess is only around $200, so it is a lot of paperwork for such a small sum.)
Thanks :)

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