a couple of 2006 Prius tax questions

[mustu]

TurboTax should be able to figure out if you're affected by AMT as long as the proper information is filled in. There's no simple answer to what income level can potentially kick in AMT. If someone has gross income higher than the AMT exemption amount ($42,500 for single, $62,550 for married filing jointly) you can potentially have an AMT liability. It really depends on income and the type and amount of deductions that someone has.

Since the hybrid tax credit is not available as a credit for AMT, having this makes it more likely that someone who normally wouldn't be in AMT will have to pay some.

[juliem]

Sigh, thanks Mustu. I think this may be a good year to go running back to the family accountant. I don't want to goof this up.

[nstevens]

I just got back from my accountant's office and I was only able to use $650 of the credit (06 Prius purchased in July 06) due to AMT. Needless to say I'm not too happy about it! Apparently my Minnesota State income tax had a negative effect on my AMT situation?

[Kross]

Wow, that sucks nstevens.

Your post is making me nervous now...especially since I have no idea how AMT is calculated (apparently the method behind the madness is pretty darn convoluted)

I guess I can only hope for the best. I am not meeting with my accountant until February 7th, so I will have to wait two weeks to find out where I stand.

*fingers crossed*

[JimN]

<div class='quotetop'>QUOTE(mustu @ Jan 23 2007, 02:57 PM) [snapback]379653[/snapback]</div>

I'm a CPA and believe I can shed some light on this discussion.

The reason the current Form 8910 shows 2005 in the upper right hand corner (even though this credit wasn't available unless cars were purchased after 2005) is because it could apply to taxpayer's who had a fiscal tax year.

So, if a business had a fiscal year ending 3/30/06 they would file a 2005 tax return. However, they would still get this credit if the car was purchased in 2006.

The IRS has not released the 2006 version of this form yet. My professional tax software has a draft version of the form and it's very similar to the 2005 version (but not exactly the same). I personally would not file a return without a final version of this form. However, if someone really really wanted to file the return now I think they could just cross out 2005 and write in 2006. I wouldn't file electronically though if you were doing this.

Anyone claiming this credit will also need to calculate their AMT liability. I think it will be interesting to see how many people qualify for full credit because of AMT. I've had several clients call me about buying a hybrid and the tax credit. In all their cases, they would not receive any credit because of AMT.
[/b]

Mustu,
Welcome! Welcome! Welcome! And thank you for posting. There are so few people filing on a fiscal basis I didn't even think of that. I hope everyone who wants to file early reads your post.