Figured it out! (This is gonna get a bit complicated)
Nowadays chloramine is added to a lot of people's water instead of chlorine. The problem with chlorine is that it's very unstable and easily dissipates, so the water companies have to add a lot of it to ensure that some of it remains in the water until it gets to our tap. Chloramine is chlorine bonded with ammonia- it is much more stable and actually quite difficult to get out of water, so the water utilities don't need to add as much of it.
When we test water for ammonia, any water containing chloramine will give an ammonia reading. Chloramine is dangerous to fish, and does need to be removed from water, so it's important to make sure you have a water conditioner that removed chloramines.
Unfortunately, water conditioners don't work perfectly. The way Prime works (and I'm pretty sure this is true of all the other commercial water conditioners) is that it *removes* the chlorine part of chloramine, and converts the ammonia (NH3) part into ammonium (NH4+).
Here's the good thing: NH4+ is relatively harmless to fish. I use relatively because it can cause harm, but only in much higher concentrations than is probably present in this case. It's also much more readily absorbed by plants.
The thing about our liquid test kits, is that they test for *both* NH3 and NH4+, so you don't know exactly what the concentration of each type of ammonia is.
Here are two Q&A's I got off the Seachem website about their dechlorinator, Prime:
Q: I am using Prime™ to control ammonia but my test kit says it is not doing anything, in fact it looks like it added ammonia! What is going on?
A: A Nessler based kit will not read ammonia properly if you are using Prime™... it will look "off scale", sort of a muddy brown (incidentally a Nessler kit will not work with any other products similar to Prime™). A salicylate based kit can be used, but with caution. Under the conditions of a salicylate kit the ammonia-Prime complex will be broken down eventually giving a false reading of ammonia (same as with other products like Prime™), so the key with a salicylate kit is to take the reading right away. However, the best solution is to use our MultiTest: Ammonia™ kit... it uses a gas exchange sensor system which is not affected by the presence of Prime™ or other similar products. It also has the added advantage that it can detect the more dangerous free ammonia and distinguish it from total ammonia (which is both the free and ionized forms of ammonia (the ionized form is not toxic)).
Q:I tested my tap water after using Prime and came up with an ammonia reading. Is this because of chloramine? Could you explain how this works in removing chloramine?
A: Prime works by removing chlorine from the water and then binds with ammonia until it can be consumed by your biological filtration (chloramine minus chlorine = ammonia). The bond is not reversible and ammonia is still available for your bacteria to consume. Prime will not halt your cycling process.
I am going to assume that you were using a liquid based reagent test kit (Nessler based, silica). Any type of reducing agent or ammonia binder (dechlorinators, etc) will give you a false positive. You can avoid this by using our Multitest Ammonia kit (not affected by reducing agents) or you can wait to test, Prime dissipates from your system within 24 hours.
This quote was gotten from the following website address: http://www.seachem.com/support/FAQs/Prime_faq.html