06 Model Ordered Today

[olcorral]

Just wanted you to know Dublin Toyota in California, called me today asking for my order. I'm going for the 06 Barcelona Red Pkg 8.
The dealer says delivery date to be mid December.
olcorral.

[olcorral]

By the way,
I think this forum and all you folks are great. I really look forward to being a part of your Pruis-world.
Nice commmunity to be a part of!
Thanks,
olcorral.

[Tideland Prius]

Interesting. First confirmation. Thanks!

Welcome to PriusChat!

[jbarnhart]

I would think that a two-week wait might be worth it if you pay income tax. You'll be getting something like a 10% discount from the feds with their $3K tax credit -- but only if you take delivery sometime after 1/1/06.

[olcorral]

That bring up a good point, TAXES. I'm looking to get money back from IRS this next tax season.
For me, is it better to get a tax credit or a tax deduction? I'm just a little confused about my particular situation seeing I will be getting $ back. (at least that's the way I have it planned).

[efusco]

Moved to "Order Tracking" We're starting to see a lot of these posts folks, lets try to put them where they belong as lots of folks don't want to read about each and every order placed.

[onerpm]

Originally posted by olcorral@Nov 15 2005, 09:41 AM
That bring up a good point, TAXES. I'm looking to get money back from IRS this next tax season.
For me, is it better to get a tax credit or a tax deduction? I'm just a little confused about my particular situation seeing I will be getting $ back. (at least that's the way I have it planned).

[snapback]155814[/snapback]

Wait to pick up your car until 1/1/06 or after. You'll want the tax credit. Even if you owe 0 taxes to the government for 2006 (because of low income, large deductions, etc.) a tax credit of $3000 (or whatever it will be determined to be in 2006, not finalized yet) gets you a check from the government for $3000.

The tax deduction for 2005 purchases is $2000. If you expect to be getting ALL of your 2005 withholdoing back (in other words, you have a low enough income, or enough deductions, etc., so that you owe NO tax), the $2k deduction is worthless.

What is probably the case is that you are paying some tax, but have overwithheld, so you will get a partial refund for 2005 when you file for it next year. So, you probably could make use of the 2k deduction; however, a deduction only reduces your taxable income dollar for dollar and, depending on what tax bracket you're in, the actual cash benefit to you of taking a 2k deduction is going to be only a few hundred dollars.

In other words, a tax credit reduces your tax bill dollar for dollar (and even goes beyond zero to get you cash if you owed no taxes anyway); a deduction only reduces your tax bill by your effective tax rate. HUGE difference.

There are some exceptions/complications related to the above that could cause the answer to change (like the AMT, or timing issues, etc.) but it's unlikely they apply to you. If you lack confidence to figure it out, consult a tax pro.

rpm

[Kiloran]

Originally posted by olcorral@Nov 15 2005, 10:41 AM
That bring up a good point, TAXES. I'm looking to get money back from IRS this next tax season.
For me, is it better to get a tax credit or a tax deduction? I'm just a little confused about my particular situation seeing I will be getting $ back. (at least that's the way I have it planned).

[snapback]155814[/snapback]

There's coverage of various aspects of government incentives for 2005 and 2006 in the new Toyota Prius FAQ.

The 2006-Model-Year-Prius-Calculator also provides some side-by-side comparison of pricing, factoring in tax benefits.

[olcorral]

Now that is the answer I have been seeking. Thank you!
You clarified many things for me as to what the best outcome would be.
You are right, of course I owe the Govmt. money but mistated my position. I stand corrected. I will hopefully be getting a refund as I have tried to adjust my deductions so that I may.
No kidding, I would be getting a check from Uncle Sam for $3000 (?) if I waited until after Dec 31, 2005? As you can tell, I'm no tax expert and didn't know that even if I had money in the form of a refund due to me, I would still be entitled to the credit. Very cool. That brings up another question:
The car comes in in mid December and I want to take delivery on Jan 1. What can I do? Pass on the car or talk with the dealer and work out something so that I may get the tax credit? I'd put something more on the car to hold it for 2 weeks.
By the way, after taking the delivery on the car in 2006, the tax credit won't kick in until the 2006 taxes are due in 2007, right?
Thank you for all your help!
olcorral.

[Kiloran]

Originally posted by olcorral@Nov 15 2005, 03:44 PM
Now that is the answer I have been seeking. Thank you!
You clarified many things for me as to what the best outcome would be.
You are right, of course I owe the Govmt. money but mistated my position. I stand corrected. I will hopefully be getting a refund as I have tried to adjust my deductions so that I may.
No kidding, I would be getting a check from Uncle Sam for $3000 (?) if I waited until after Dec 31, 2005? As you can tell, I'm no tax expert and didn't know that even if I had money in the form of a refund due to me, I would still be entitled to the credit.  Very cool. That brings up another question:
The car comes in in mid December and I want to take delivery on Jan 1. What can I do? Pass on the car or talk with the dealer and work out something so that I may get the tax credit? I'd put something more on the car to hold it for 2 weeks.
By the way, after taking the delivery on the car in 2006, the tax credit won't kick in until the 2006 taxes are due in 2007, right?
Thank you for all your help!
olcorral.

[snapback]155949[/snapback]

No. You will not get a check from the government for either the 2005 deduction or the 2006 credit.
It will be processed with your 2005 or 2006 tax return.
However, read this thread for a strategy to realize the tax credit sooner.
2006 Tax Credit Strategy, How to get your $ faster