A couple of 2015 tax filing questions - AMT and Dividends

[dvalley]

First- I got hit with the dreaded AMT this year for the first time ever a whopping $10. Since it's only $10 do I bother trying to figure it out? I had about $700 in capital gains in 2015 and approx $1200 or so in qualified dividends - nothing earth shattering.

Second question-
Here's one of the alerts the TaxAct software gave me in reviewing my return:

On the Form 1099-DIV from SCOTTRADE INC you entered nondividend distributions of $12.03. These distributions are a return of capital (basis) and reduce your basis in the investment. The distribution is nontaxable until it exceeds your basis in the investment. For example, you bought a share of stock for $10 then received a nondividend distribution this year of $3 it would reduce your basis to $7. You would make note of this in your own personal tax records. You do not need to report the distribution as a capital gain as you still have basis in the stock. If instead the dividend distribution was $15 then you would reduce the basis of your stock to $0 and report the excess amount of $5 as a capital gain.

Adjusting your cost basis in the investment will be an ongoing process. Each year you receive a nondividend distribution you will need to adjust your basis accordingly. Therefore using the same example as above, if you have a nondividend distribution this year which reduces your basis in the stock to $7 and next year you receive another nondividend distribution of $10 you would adjust your basis accordingly. Your basis would reduce to $0 and you would report the excess amount of $3 as a capital gain.

If you need to enter a capital gain as a result of a nondividend distribution click the info icon for information on how to enter it into the program.

What the heck? I'd presume Scottrade will keep track of this and provide whatever info I need to be entering on the various forms? or do I really need to track this stuff myself? seems daunting.

[audreyh1]

Yes, you have to file form 6251 AMT.

On the second - we also had a non-dividend distribution and I'm counting on Fidelity to have figured it out/supplied complete info when we downloaded their tax data into Turbotax.

I guess I'll be looking for in when I review what TT did.

[dvalley]

Thanks! I should've clarified, the TaxAct software will file the appropriate AMT forms, I just thought it was odd that I got hit with it and this year wasn't even when I've made the most wages/salaries etc.

I sure hope the brokerage firms are keeping track of the cost basis and any non-div distributions.

[bingybear]

Quote:

Originally Posted by dvalley Thanks! I should've clarified, the TaxAct software will file the appropriate AMT forms, I just thought it was odd that I got hit with it and this year wasn't even when I've made the most wages/salaries etc. I sure hope the brokerage firms are keeping track of the cost basis and any non-div distributions.

Taxact should file the correct forms for AMT since you are paying some. But you're likely looking in the wrong place to figure out why you got hit with AMT buy saying you did not get hit with lot added income. Instead look at you are writing off in your itemized deduction and extra exemptions (like kids). They compare your normal tax with the AMT tax after removing certain deduction (like state taxes I think) and exemptions and using AMT rates. You pay the higher tax. Look up the help on TaxAct and look at the AMT form to figure what caught you.

As for Scot Trade keeping track of basis adjustment. Go check out what they now claim as your basis now verse before the distribution. I had one that Schwab tracked correctly. I would expect some items like MLPs may not get tracked correctly as the data may go directly to the owner in the form of a K-1 and the broker may not see it. Validate that your broker will track it. You are ultimately responsible for your tax info.

[kaneohe]

If you're serious about finding cause of AMT Search Results

It might be difficult since the AMT is so small but you might start w/ last year's return or one that had no AMT and see what was different from this yrs. You can use tax software/calculator to start w/ no AMT and do what-ifs to see what changes cause it.

[karen1972]

I don't think the companies keep track of this non-dividend distribution. I'm still trying to figure out what to do with Kraft and the mess its split has made

[bingybear]

Quote:

Originally Posted by karen1972 I don't think the companies keep track of this non-dividend distribution. I'm still trying to figure out what to do with Kraft and the mess its split has made

In general I would agree with you. As noted in my post above Schwab did track one for me a couple years ago. The company was MIC. When I saw my 1099-DIV noting non-dividend income and the detail noting a non-zero amount of return on capital, I checked the basis they had listed online with the record of what I had paid. All accounting was correct, they were tracking it. Since I sold it in early 2015, I will double check it is correct when I get my 1099 composite.
I agree to be careful with what is reported by brokerage houses. I have found that mine are getting better since reporting became mandatory.