Tax Incentives, Federal and state

$2,500 federal
$500 CA tax credit from what I hear (not confirmed)
$1,500 CA Clean Air rebate

 

I don't see the additional $500 CA tax credit. But in searching, I found this:

Drive Clean

There are additional rebates in certain cities (Corona and Riverside). Some companies offer incentives as well.

 

Pardon my ignorance but how do the federal and state tax credits work exactly? Feel like such a n00b LOL

 

A credit will lower the amount of tax owed.

To claim the Federal credit the taxpayer completes the appropriate form(s) and enters the amount of the credit on the 1040 form in the Payments & Credits section. The payments & credits are netted with the tax resulting in a refund or an additional liability.

Different jurisdictions will have different forms & requirements for documentation.

 

Is there a limit of the total credit of Prius Plug-In the government allows to claim? Do we need to do anything to lock in the tax credit before filing the tax return next year?

 

Has anyone received their $1,500 CA Clean Air rebate yet? I was just wondering how long that took to process.

 

The federal credit for the PiP will be the lesser of $2500 or your total tax liability for the year. That is your total liability, not what you additionally owe or will get back when you file your taxes. When you file your taxes, you compute how much tax you owe, you then subtract what you have already paid in (like payroll withholding), and settle the balance one way or the other. The credit for the PiP is an adjustment on the taxes owed, and cannot reduce the tax liability to less than zero. On the other hand, you can tweak your withholding so that you over-withhold, and get the over-payment back when you file your taxes. Getting money back may feel good, but you are making an interest-free loan of your money to the government

 

http://priuschat.com/forums/toyota-...-vehicle-rebate-project-rebate-their-pip.html

 

The IRS determines whether or not a vehicle qualifies & the amount of the credit. This information is updated every model year.

The total credit can't exceed your tax liability. If your tax liability is $5000 you can buy 2 cars & claim 2 credits. If your liability is $2000 that's all you'll get out of one car.

The credit does not reduce the tax. it is added to the tax payments made throughout the year.

 

Does anyone know if there is a income cap to qualify for the $2,500 federal credit? I am sure my tax liability is high enough. I just worry my AGI is too high.