Use up a US AMT carryforward while paying Canada tax also? -


Second question.  I haven't seen this topic either in the three years of Cen-tapedes I've kept in my archive.

Q: My spouse and I are US Citizens, resident in British Columbia for the last few years, so we are blessed with the opportunity to pay taxes to both the US (federal, no state, married filing jointly), and Canada and BC.

We have a US Alternative Minimum Tax (AMT) carryforward from the last several years. Some years we have been liable for US AMT tax, so haven't been able to draw down this carryforward amount.  In what circumstance would we be able to use this AMT carryforward to reduce our total tax in a future year?

What puzzles me is this. My naive understanding is that, as taxpayers to both the USA and Canada, both the US and Canada assess taxes on us, but credit whatever we paid to the other jurisdiction. Thus if we get a credit or deduction in one jurisdiction that the other doesn't recognize, it doesn't lower our total tax. It just lowers the tax to the one country, and increases the tax to the other country by the same amount. It doesn't change the total.  Do I understand correctly?

I worry that if we were to apply our AMT carryforward, it might reduce our US taxes, but also our Canadian foreign tax credits. Thus the amount of US tax reduce by the AMT carryforward would just become payable to Canada, and our total tax wouldn't change.  We'd lose the carryforward for no benefit.

If my understanding is correct, then how to people who have a US AMT carryforward and move to Canada ever get value for that carryforward? Do we have to become non-residents of Canada for a few years?

Thanks for the great tax information service,
david ingram replies:

You may have noticed that i haven't answered any questions on this site since Nov 25 -  I have so many to answer now that it will never happen.  However, I am trying to answer clients' questions where I can.

Tonight is the first time I have answered questions in three weeks.

Your question is a good one.  Canada usually gives credit for taxes paid to the US.  At the moment, they are allowing the tax you paid to the US including the AMT.when it has been created by US income.  If there is no US income the AMT is clearly an extra tax for you but does go into an AMT account and CAN BE RECOVERED if you move back tot he US and your income is low enough 

Remember, that persons living  and working in the USA only are also subject to AMT if their income fits the profile.

If you remain in Canada as i think you intend to, the AMT paid to the US is likely lost to you in terms of recovery.

Hope this helps


Every Thursday at 12 noon and 7 PM, Fred Snyder of Dundee Wealth Management
presents free Financial Seminars for his clients, potential clients and anyone who phones and asks to attend.

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phone (604) 731-8900 - ask for Freda to register for free.

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Fred Snyder  also is the host of ITS YOUR MONEY every Sunday evening   We have taken calls from around the world.  In one case, a lady phoned from Florida, got her answer and then asked if I was the David ingram she knew in Regina back in 1959.  Small world as they say.

  IT'S YOUR MONEY appears LIVE on CKNW  from 6 PM to 7 PM as a phone in show to answer your questions.  Call (604) 280-9898 or 1-877-399-9898 or *9898 on your cell to get your question on the air.  I am the
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david ingram's US / Canada Services
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IRS Circular 230 Disclosure:  To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at or  If you forward this message, this disclaimer must be included."



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