Minimum tax credit
Certified Financial Planner glossary · Certified Financial Planner
Definition
A credit carrying forward alternative minimum tax paid on deferral items, recoverable when regular tax exceeds tentative minimum tax.
Minimum tax credit in plain English
A client paid AMT two years ago on a timing item and now regular tax finally exceeds tentative minimum tax. Minimum tax credit is the credit carrying forward AMT paid on deferral items, recoverable when regular tax exceeds tentative minimum tax. Exclusion items generally do not create the same recoverable credit story. Think of it as a prepaid tax waiting for a year when the regular system catches up. Recovering prior AMT in a year when regular tax runs higher is the minimum tax credit at work.
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