This is a really common issue that catches a lot of people off guard! You're absolutely right to be thorough by cross-checking between different programs - that level of diligence often reveals these kinds of discrepancies that can be costly if missed. From my experience dealing with similar AMT foreign tax credit situations, FreeTaxUSA appears to be handling this correctly. The key principle is that when you're computing AMT, you need to stay within the AMT "universe" for all related calculations. This means your Form 1116 limitation calculations should indeed use your AMT-adjusted income figures rather than your regular taxable income. The reason the IRS instructions aren't more explicit about this is because they assume you understand that AMT creates a parallel tax calculation system. When Form 6251 adjusts your income by adding back certain deductions and making other modifications, those adjusted figures should flow through to all related forms, including the AMT version of Form 1116. A $2,700 difference is significant enough that I'd definitely recommend getting this right rather than just picking the software that gives the bigger refund. If you want additional confirmation, you might consider reaching out to a tax professional who specializes in international tax issues, or even contacting the IRS directly for guidance on your specific situation. The good news is that once you understand how this works, future years become much easier to handle!

This is exactly the kind of thorough tax preparation approach that saves people from costly mistakes! Your situation perfectly illustrates why the AMT system is so confusing - it creates this parallel tax universe that affects multiple forms in ways that aren't always obvious. You're absolutely right to trust FreeTaxUSA's approach here. The AMT version of Form 1116 should indeed use AMT-adjusted figures throughout the calculation. When Form 6251 modifies your taxable income by adding back the standard deduction and making other AMT adjustments, those modified amounts need to flow through to the Form 1116 limitation calculations. Otherwise, you're mixing regular tax and AMT figures, which defeats the purpose of having separate calculations. The $2,700 difference you're seeing is actually not uncommon when AMT kicks in with foreign tax credits. The interaction between these two complex areas of tax law can create significant swings in your final tax liability. One thing to keep in mind for future years - if you're consistently subject to AMT, you might want to consider tax planning strategies to minimize the impact. This could include timing certain deductions or income recognition to optimize both your regular tax and AMT calculations. Don't go with "whichever gives the bigger refund" - that's a recipe for audit trouble. Stick with the software that's calculating it correctly (FreeTaxUSA in this case) and keep detailed documentation of the calculations for your records.

Just wanted to add something important about the calculations that nobody mentioned yet. When you're figuring out your ACA subsidy using these formulas, remember that the Second Lowest Cost Silver Plan (SLCSP) price is AGE-BASED. So if you're building a spreadsheet, you need a way to input the SLCSP for your specific age. For example, a SLCSP might cost $350/month for a 30-year-old but $750/month for a 60-year-old in the same location. This makes a HUGE difference in the final subsidy amount.

I've been working with ACA subsidy calculations for years as part of my tax preparation business, and I wanted to share a few additional considerations that might help with your spreadsheet: 1. **MAGI vs AGI**: Make sure you're using Modified Adjusted Gross Income, not just AGI. MAGI includes things like foreign earned income and tax-exempt Social Security benefits that regular AGI excludes. 2. **Household size complications**: If you're married filing separately, the household size and income calculations get tricky. You might need separate logic in your formula to handle different filing statuses. 3. **Reconciliation on tax return**: Remember that the premium tax credit you calculate and receive during the year gets reconciled on your tax return (Form 8962). If your actual income differs from your estimate, you might owe money back or get additional credit. 4. **State marketplace vs federal**: Some states have different subsidy structures or additional state-based subsidies on top of the federal ones. Make sure your formula accounts for your specific state's rules. For the Excel implementation, I'd recommend creating separate worksheets for the lookup tables (FPL amounts, tier percentages) so you can easily update them each year without breaking your formulas. Also consider adding data validation to prevent input errors that could throw off your calculations.

Thanks everyone for the helpful responses! This really puts my mind at ease knowing it's selective rather than universal. @ThunderBolt7 your airport security analogy is perfect - that's exactly how I'll think about it now. @Keisha Jackson that's interesting about both spouses needing to verify separately. I'll keep an eye out for another letter for my spouse, though nothing has arrived yet. I think I'll go with the ID.me online verification since several of you mentioned it's much faster than scheduling an in-person appointment. Has anyone had issues with the online verification not working properly, or is it pretty reliable? I'd rather not have to fall back to the TAC appointment if I can avoid it.

I can add some perspective as someone who works with tax preparation software. The IRS uses machine learning algorithms that analyze patterns in returns to flag potential identity theft or fraud. Your MFJ status change is definitely a common trigger, but so are things like significant income changes, new dependents, first-time homebuyer credits, or claiming certain refundable credits like EITC or Child Tax Credit. The system doesn't "know" these are legitimate changes - it just sees deviations from your historical filing pattern. From what I've observed, about 6-8% of returns get flagged for verification each year, with higher rates during peak filing season (February-March) when most fraudulent returns are submitted. The good news is that once you complete verification, you're much less likely to be selected again unless there's another significant change in your tax situation.

One more tip - when you fill out Form 8949 with the corrected basis information, make sure you use adjustment code "B" which stands for "Basis adjustment." This tells the IRS that you're not using the basis that was reported on the 1099-B because of special circumstances (in this case, inherited property with stepped-up basis). Also, keep really good records! I went through an IRS inquiry on this exact issue last year, and having all my documentation about the date of death value and the transfer of assets made it a non-issue. The IRS agent actually thanked me for having everything organized and ready.

This is really helpful information from everyone! I'm in a very similar situation - inherited some mutual funds from my grandmother last year and was completely confused when the 1099-B showed her original purchase dates from the 1990s instead of my inheritance date. One thing I learned the hard way is to also check if there were any reinvested dividends or capital gains distributions that happened between the date of death and when you actually received/sold the shares. In my case, there was a small dividend reinvestment that occurred during the estate settlement period, and I had to account for that separately since it didn't get the stepped-up basis treatment. Also, if anyone is dealing with multiple inherited accounts across different brokerages, each one might handle the reporting differently. Some of my grandmother's accounts automatically updated to show the stepped-up basis, while others still showed the original purchase information. It's worth calling each brokerage to understand how they're reporting things before you file your taxes. The Form 8949 adjustments mentioned by others are definitely the way to go. I ended up owing way less than I initially thought because of the stepped-up basis!

Does anyone know if receiving a 1095-C affects your tax refund? I declined my employer's coverage because my spouse's plan was better, but my tax refund was way less than last year.

This is a really common source of confusion! The 1095-C form serves multiple purposes for the IRS, and one key thing to understand is that it's not just about what coverage you actually had - it's also about what coverage was available to you. Your employer is required to report the "Employee Required Contribution" (line 15) for the lowest-cost self-only coverage that meets minimum requirements, regardless of whether you enrolled or not. This information helps the IRS determine if you were offered "affordable" coverage, which can impact things like eligibility for premium tax credits if you got coverage through the Health Insurance Marketplace instead. The $111 amount you're seeing is essentially a data point for tax calculations - it doesn't mean you were charged that amount. Since you declined coverage and aren't seeing payroll deductions, everything sounds correct on your end. Just keep the form with your tax records, as you may need to reference it when completing your tax return to answer questions about health coverage offers from your employer.