Recouping AMT credit mechanics - how to recover the $50k credit in future years?

So if my regular tax is like $60k and my AMT calculation is $20k for the next year, does that mean I can only use $40k of my AMT credit that year? And then I'd still have $10k left to use in future years?

Yes, you've got it exactly right. If your regular tax is $60k and your AMT calculation is $20k, the difference is $40k - so you could use up to $40k of your AMT credit that year, reducing your tax bill to $20k. The remaining $10k would carry forward to future tax years where you could apply it when your regular tax exceeds your AMT again. You'll essentially recover the AMT credit in chunks over time as the difference between your regular tax and AMT calculations allows. Some people recover it over just 2-3 years, while others might take longer depending on their tax situation.

Wait, I've never heard of this. Does it actually figure out your optimal strategy for recouping AMT credits? Like would it tell me if I should be timing certain stock sales or exercises to maximize how quickly I get the credit back?

Is this just for AMT stuff or does it handle other complex tax situations? I've got some foreign income and stock options that make my taxes a nightmare every year.

It definitely helps with timing strategies for recouping AMT credits faster. It analyzes your specific tax situation and can show scenarios where certain actions (like timing stock sales) would let you recover more of your credit in a given year. It helped me realize that selling some long-held stocks in specific tax years would maximize my AMT credit recovery. It handles way more than just AMT issues. It's particularly good with complex situations involving stock options, RSUs, foreign income, and investment strategies. I have RSUs and some rental property income, and it handles all of that. The analysis covers pretty much any complex tax scenario where optimization could save you money.

How does this actually work though? Like, are they just calling the IRS for you or something? I don't understand how they can get through when nobody else can.

Yeah right. There's no way this actually works. The IRS phone system is literally designed to be impossible. If this actually worked, everyone would be using it and the IRS would shut it down immediately.

They don't call for you - they use some kind of technology that holds your place in the queue and monitors the wait. You make the initial call, and when you're about to reach an agent, they call you so you can connect. You're still the one talking directly to the IRS, they just handle the painful waiting part. No, I was super skeptical too! I thought it was a scam at first. But it actually does work - they use a system that navigates the IRS phone tree and monitors your place in line. I think it works because they're not bypassing anything, just making the existing system more efficient. I waited 3+ hours on my own multiple times and got nowhere. With Claimyr I was talking to an agent in about 45 minutes (still a wait, but way better).

What tax software actually handles this well? I've been using TurboTax and I'm not convinced it's properly tracking my AMT credits from year to year.

I've had the best experience with TaxAct actually. It has a pretty good system for tracking carryforwards from year to year, including AMT credits. I tried TurboTax before but found it was a bit confusing with AMT credits - it did track them but wasn't very transparent about how they were being applied. H&R Block's software is also decent for this specific situation. The key with any software is to make sure you import last year's return properly so the AMT credit carryforward gets pulled in accurately. If you're dealing with large AMT credits like $50k though, it might be worth having a CPA review things at least for the first year of recovery to make sure it's all set up correctly.

Your accountant was likely confused. AMT credits don't expire and aren't generally "lost" - they carry forward indefinitely until used. The only way you wouldn't recover them is if you never again have regular tax higher than AMT (which is unlikely for most people). What might have happened is that your accountant was confused about the timing of recovery. Before the tax law changes in 2018, there were more limitations on how much AMT credit you could claim in a single year. Now it's generally simpler - you can claim up to the difference between your regular tax and tentative minimum tax. I'd recommend getting a second opinion if your accountant told you some credits were permanently lost. That doesn't sound right based on current tax law.

This is such an important point about finding the right tax professional! I'm actually in the process of looking for a new CPA right now because I suspect mine isn't handling my AMT credits correctly. When you say "specializes in stock compensation and AMT issues" - how did you find someone with that specific expertise? Are there particular certifications or credentials I should look for, or is it more about asking the right questions during consultations? I'm worried I might be in the same boat as you were with missing credits from previous years. The idea of filing amended returns sounds daunting but if there's money on the table, I need to pursue it.

Great question! I found my current CPA through a few different approaches. First, I searched for tax professionals who specifically mention "stock compensation" or "equity compensation" on their websites - that's usually a good indicator they deal with AMT issues regularly since they go hand in hand. I also asked colleagues who work at tech companies or startups for referrals, since they're more likely to have dealt with similar situations. When interviewing potential CPAs, I asked specific questions like "How many AMT credit carryforward cases do you handle per year?" and "Can you walk me through how you'd approach recovering a large AMT credit balance?" As for credentials, look for CPAs who have experience with high-income earners or who mention specializing in "complex tax situations." Some also have additional certifications in financial planning which often correlates with understanding stock compensation. The amended returns honestly weren't as scary as I thought - my CPA handled most of the heavy lifting. If you suspect you've missed credits, it's definitely worth having someone review your last 3 years of returns. The statute of limitations for amended returns is generally 3 years, so don't wait too long if you think there might be issues.

This is such a crucial point about state vs federal AMT credits! I'm also in California and completely overlooked this distinction when I was planning my AMT credit recovery strategy. I was assuming I could use my federal credit to offset my overall tax burden, but you're right that they're completely separate systems. Do you happen to know if California's AMT credit recovery works the same way as federal - where you can claim it when your regular state tax exceeds your state AMT calculation? I'm wondering if the timing might work out differently between state and federal, which could actually help with cash flow planning. The state move consideration is really smart too. I've been thinking about relocating to Texas in a few years, and I hadn't considered how that might affect my ability to recover the California AMT credits I'm building up now.