I am reading the KPMG link http://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/us-tax-americans-abroad.pdf, which is very helpful. I have a question about Alternative Minimum Tax (AMT). My wife and I are expats. If my wife and I are making qualified annual foreign income of approximately 100k each, and we will be filing jointly, if after our foreign earned income exclusion is taken, will we have to pay tax due to the AMT? We will only be taking out standard deductions and not itemizing. If we do owe AMT, why so, and how it this figured?
Hi. There are some deductions and credit that will trigger AMT but foreign income exclusion is not one of them. High number of personal exceptions, significant state and local taxes, lots of medical expenses and reimbursed medical expenses, ISO - incentive stock options, lots of long term capital gains and high interest on second mortgage are most common triggers. Most of them are related to Itemized deduction (or Schedule A). Because several major tax legislation are still to be passed, reliable data to determine if your 2012 tax return will qualify for AMT or not are currently not available. IRS website offer free AMT Assistant, or calculator, that will help you with AMT calculation: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Alternative-Minimum-Tax-%28AMT%29-Assistant-for-Individuals
The calculator is relatively easy to use and it is available for 2009 - 2011 tax years. It is form of online interview, 100% confidential, no need to identify yourself.