Has anyone noticed that tax software handles the Foreign Tax Credit Simplified Limitation for AMT differently? I used TurboTax last year and H&R Block this year, and they gave me completely different results for basically identical situations. TurboTax recommended filing Form 1116 while H&R Block said to take the simplified election.

I've been dealing with this exact situation for the past three years and wanted to share what I've learned through trial and error. The Foreign Tax Credit Simplified Limitation for AMT is one of those areas where the IRS instructions are particularly unclear. Here's what I wish someone had told me earlier: even though you qualify for the simplified election (under $300), it's worth calculating both methods if you're subject to AMT. The reason is that AMT has different income calculations, and sometimes the foreign source income limitation works out differently. For your specific situation with $290 in foreign taxes and $4,200 in dividend income, I'd recommend running the numbers both ways. The simplified election is definitely easier, but if you're already close to AMT territory, filing Form 1116 might give you a better result. The key is that Form 1116 lets you use the actual foreign source income calculations, which can be more favorable than the simplified approach when AMT is involved. One practical tip: if you decide to file Form 1116, make sure you elect the simplified limitation on Form 6251 line 6. This saves you from having to do separate AMT foreign source income calculations, which is where things get really complicated. Also, keep good records of your foreign taxes paid - even if you take the simplified election this year, you might want to switch to Form 1116 next year if your foreign investments grow.

Has anyone dealt with this situation but with an unmarried couple? My girlfriend and I bought a house last year (both names on mortgage and deed) but I pay 75% and she pays 25%. The 1098 has both our names. Are the rules the same for us as they are for married couples filing separately?

Just to add some additional context that might be helpful - when you're documenting your 60/40 split, make sure you keep records of not just the mortgage payments themselves, but also any related expenses like PMI (private mortgage insurance) if applicable. Those can also be split proportionally based on your contribution percentages. Also, don't forget about the SALT (State and Local Tax) deduction limit of $10,000 if you're itemizing. If your property taxes plus state income taxes exceed this limit, you'll want to strategically plan which spouse claims what portion to maximize your combined tax benefit. Sometimes it makes sense to have one spouse claim the full property tax deduction while the other takes more of the state income tax deduction, rather than splitting everything proportionally. Keep detailed records of all your payments and consider setting up a simple spreadsheet to track the percentages throughout the year - it'll make next year's filing much easier!

Quick question - I was in a similar situation but my foreign entity existed for about 5 months and the bank account had about $500 sitting in it from initial capitalization. No transactions other than a single deposit. Would this still qualify as dormant?

I went through something very similar last year with a UK limited company that we formed and then dissolved within 6 months. Never conducted any business operations, just issued the minimal required shares to directors. After researching this extensively (and losing sleep over it), I learned that the key test for dormant status isn't whether you formed or dissolved the company, but whether it conducted actual business activities. The IRS looks at operational activity - did it generate income, incur business expenses, or hold income-producing assets? In your case, it sounds like you clearly meet the dormant criteria under Rev. Proc. 92-70. The formation and dissolution are just administrative/legal actions, not business operations. The nominal share issuance to directors is also standard corporate formality that doesn't disqualify dormant status. You'll still need to file Form 5471, but you can use the simplified reporting for dormant entities - basically just the identification information without all the detailed financial schedules. Just make sure to keep good records of the formation, dissolution, and lack of business activity in case the IRS ever asks questions later.

Don't forget about the basis limitation rules under Section 704(d) too! Even if your at-risk amount allows you to take the loss, if your capital account goes negative, you might end up with a "suspended loss" that you can't use until your basis increases again. Partnership taxation is stupidly complicated. I strongly suggest working with a CPA who specializes in partnerships rather than trying to DIY this. The rules about basis, at-risk amounts, and passive activity losses can get extremely complex very quickly.

Just wanted to add one more consideration that might be relevant for your situation - the timing of when you actually made the loan during the tax year can matter. If you made the loan partway through the year, you'll need to determine your at-risk amount as of the end of the tax year, not when you first made the loan. Also, since you mentioned this is only your third year and you're not expecting profits until year five, make sure you're tracking your basis adjustments year over year. Each year's losses will reduce your outside basis, and you'll need to maintain detailed records to properly calculate your basis for future years when the partnership hopefully becomes profitable. One last thing - if your partnership has any nonrecourse debt (debt where partners aren't personally liable), that gets allocated differently and won't increase your at-risk amount the same way your direct loan does. Just something to keep in mind as your business grows and potentially takes on additional financing.

Just a word of caution - DO NOT just keep cashing the refund checks without resolving this. The IRS operates under a "pay now, fight later" system. They might be sending you refunds now, but if they determine later that those payments were legitimately meant for your tax account, they can come back and assess underpayment penalties and interest for the taxes you should have paid. I knew someone who had a similar situation (though it was just for one year, not ongoing). They spent the refund, and two years later the IRS figured out the error and wanted not just the original amount back, but also nearly 25% more in penalties and interest.

This is such a bizarre situation! Reading through all the responses, it sounds like several people have had success getting to the bottom of similar mysteries. The fact that these payments have been so consistent for 5 years really does suggest it's not just a random error. I'd recommend trying multiple approaches simultaneously: 1) Use one of the callback services mentioned to get through to the IRS research department, 2) Have direct conversations with anyone who might have your SSN (family, former employers, accountants you've used), and 3) Consider requesting a meeting with the Taxpayer Advocate Service if the regular channels don't work. The specific dollar amounts you mentioned ($1,876.42 type numbers) really do sound like they're calculated based on something - maybe estimated taxes for a business entity, investment income, or contract work that's being reported under your SSN. Whatever you do, don't just ignore this or assume it will work out in your favor. As others have pointed out, the IRS can come back years later demanding repayment with penalties and interest if they determine these were legitimate tax obligations. Better to spend some time now getting it resolved than potentially facing a much bigger headache down the road.