How does the $2500 federal rebate work?

...correct but, of course, if you have income less than $19500 you can still take the tax credit, just that the amount of the credit will simply be less than $2500 max allowable for a PiP. And there is no credit carryover to the next year, as has been pointed out earlier.

 

Just a detail (this isn't a tax forum, after all), line 43 is the taxable income, after deducting the $5800 standard deduction and the $3700 personal deduction (for the simple case of single person with income from wages). So 46% of the people in this country have less than$9500 taxable gross income per year?!

 

$19500 + $5800 + $3700 = $29,000 (gross taxable income) = $2500 gross income tax liability ( ~ 8.6% )

btw, this is how some folks become part of the 46% that don't pay any income tax.

$29,000 is about $14/hr for someone being paid 40 hours a week, 52 weeks a year.

 

How many people making $29,000/yr would spend over $30,000 for a car? I guess you could with VERY generous financing, but a year's income for a car seems a bit steep.

 

That is perhaps why leasing is such a viable option for these vehicles. With annual lease rates around 10% of msrp the fuel savings can almost pay for the lease. I leased a Volt for $12/day to retire a vehicle I was spending $15/day to fuel and now I have $2 more to spend on lunch.

 

to summarize the thread and to may be answer the OP's question: We do not apply for the $2500 fed tax credit, through an"application form" process but rather it will be in a "line item" on the Personal/business Tax form (1099/W2's etc.. ) which we would simply fill..
is this corrrect???

 

Yes, you just claim it on IRS form 8936: http://www.irs.gov/pub/irs-pdf/f8936.pdf

enjoy

 

TurboTax should handle the tax credit too... I know it does ask if you've purchased a qualified electric plug-in vehicle during the interview process...

 

TurboTax 2011 handles it, if you want to try a test calc. It asks you EV batt size and calculates credit.
It also asks VIN but any valid VIN works.

 

It's claimed as a Misc. credit on form 1040.

I didn't realize until today that there are 7 year car loans. There must be a lot of people buying cars they can't afford.

 

not entirely true.. for the moment the PiP is interest free... if the 7 year payment is available at the 0% financing, the buyer would gain from a 7 year hypothetical inflation(s).. .. in turn, i would also say the following, there must be a lot of smart people buying cars. (period).. i know for fact the 5 year is available at the 0% financing.

 

yeah the 60-month loan is the max for 0% at this point. You can go for a shorter term (3 years min), but not longer.