New York State Income Tax Credit and Sales Tax Exemption

Rivernet,
I also purchased and took ownership of my Prius in February and called NYS. I filled out the paper work for a refund but still (one month later) have not heard back from them. Please let me know any more details if you have some. Thanks

 

shocker,
Just sending my AU-11 form in. Will let you know when I hear anything. Where are you in New York?

 

I have recieved my new york state sales tax refund. I requested the refund on February 27 and recieved the refund on May 19. Below is the breakdown that I presented to the state. I followed the format described in the instructions for Memo TSB-M-02. I included a copy of the memo with my letter or request.

Bill of Sales
Vehicle sticker price $21,021
Office conveyance fee + 289
Vehicle trade in - 1,200
Subtotal of vehicle $20,110
NY Sales Tax Rate x .0875
Tax Due $ 1,759.63

According to Memo TSB-M_02
2004 Alternative Fuel Vehicle $20,110
Incremental cost - 3,000
Amount subject to sales $17,110
NY Sales Tax Rate x .0875
Tax Due $1,497.13
Sales Tax paid $1,759.63
Actual Sales Tax due - 1,497.13
Sales Tax refund requested $ 262.50

 

Received my New York State sales tax refund today in the amount of $218.97. Bought in mid February and sent state paper work in on April 6th. Nice fathers day present.

 

To all NY State residents who took delivery of their prius in 2004. The tax credits were extended through Dec 31, 2004!!!!

I wrote to Patrick Bolton of NYSERDA, who confirmed that the credits were extended, even though the website had not been updated when last I looked (back in October or November).

So we have the following opportunities (I may have monetary values incorrect, so check w/ NYS):

1. Sales tax refund for $3,000 of purchase price.

2. State income tax credit of about $2,000.

3. Federal income tax deduction of $2,000.

I will certainly do my taxes early this year!!!!

Sharon

 

<div class='quotetop'>QUOTE(sjr14221\";p=\"61514)</div>

Great news! Wonder if TurboTax knows how to do all these deductions??

 

is that right for ny?

$3k sales tax refund
$2k state tax credit
and
$2k fed tax credit

for a total of $7k back?
That can't be right.

If it is, what site dictates this and what forms would be required?

I'm only aware of the $2k fed tax credit for 2004

 

<div class='quotetop'>QUOTE(jaguaraja\";p=\"61566)</div>

The Federal and State income tax credits are credits against your income. That is, you subtract $2,000 from your gross income before computing your tax. If you are taxed at a Federal rate of 25%, you save $500 and if at a state rate of 10% you save $300. The sales tax credit means you subtract $3,000 from the taxable purchase price. If your sales tax rate was 8.75%, this means you get back $262.50.

So, you don't get $7K back, but you might get roughly $1K back (it depends on your individual tax situation).

By the way, the following New York tax form tells you that if you purhcased a Prius in New York between March 1 and August 4, 2004, your invoice does not have to state the $3,000 hybrid cost differential. Here's the form:
Amendment to the Alternative Fuels Credits and Exemptions

 

Don't confuse a tax credit with a tax deduction. A deduction reduces your taxable income. A tax credit amounts to a refund; your tax is reduced by that amount.

The federal tax code provides a deduction for the hybrid.

If I am reading correctly, and the form written correctly, the NYS is a CREDIT, which means you get to deduct $2000 from the taxes you owe, meaning you get back $2000, not $500 in a 25% bracket.

 

ok, i think i almost got it.

There is a federal tax CREDIT for everyone who purchased a prius in 04.
meaning that everyone gets $2000. period.

The part that i'm not sure about it what 'sjr14221' mentioned above.
'a sales tax refund of $3k' and
'state income tax credit of $2k'

Is this right? How would this be claimed? I paid a doucheload of taxes for the car in NY (8.75%). State tax credit? I never heard about this? Has this been available to other states? Any NY'ers know about this?

 

.<div class='quotetop'>QUOTE(jaguaraja\";p=\"61621)</div>

The federal is NOT A CREDIT! It is a deduction, actually an adjustment to your gross income, much like your IRA deduction does.

You can get a credit for an alternative fuel/electric. The hybrid only gets a deduction.

The NYS income tax appears to give a CREDIT, as you described

For the sales tax refund, they are allowing a tax exemtion on the first 3K of the sale, so if you paid 25K for the car, NYS would expect only 22K to be taxed, but the dealer still has to collect for the tax on the full 25K, and you have to request from NYS for a refund of the tax collected on the 3K.

The NYS refunds/credits/deductions originally expired in 2003, but as per an earlier post on this thread, has been extended to 2004, just as the federal deduction was supposed to be reduced this year, but has been extended to its original amount for 2004/2005 tax years.

To add to the confusion, you can now deduct either sales tax OR state income tax (but not both) for this year and I think also for next year. If you chose sales tax, you can estimate your sales tax to deduct based on a table, or itemize. Even if you choose to use the table, you can also deduct sales tax paid on big ticket items. I think they did this to be fair to those of us who do not have state income taxes, and probably pay more sales tax to compensate.

 

Example:
You paid 25K for the car.
You're federal tax bracket is 15%, and your state is 10%.
You're sales tax is 8.75%
You live in NY State (let's not get into NYC for now)

You paid $2187.50 on the 25K in sales tax for the car. Tax law now allows an exemption on 3K, so you will get 8.75% of that 3K, or $262.50

Federal tax code allows a deduction through an adjustment of grose income of $2K for purchasing a qualified hybrid. That will give a tax reduction of $300 based on the assumed tax bracket.

By wording, the state gives you a tax CREDIT, so you will get a reduction of your tax by 2K. If it is indeed a tax credit, and not a deduction, there may be a limitation of how much of that 2K you get if you are entitled to a refund. If so, you may be able to carry it over next year.

So, with these assumtions, you would get back $262.50+$300+$2000 or $2562.50

 

thank you kind sir, you've cleared up a lot of misconceptions in my mind.

 

DanMan wrote:

To add to the confusion, you can now deduct either sales tax OR state income tax (but not both) for this year and I think also for next year. If you chose sales tax, you can estimate your sales tax to deduct based on a table, or itemize. Even if you choose to use the table, you can also deduct sales tax paid on big ticket items. I think they did this to be fair to those of us who do not have state income taxes, and probably pay more sales tax to compensate.

Well you certainly did add to the confusion. Huuhh? Is this for all income and sales taxes (as opposed to the prius-specific deductions and credits)?

Thanks,

Sharon

 

altaskier wrote:

By the way, the following New York tax form tells you that if you purhcased a Prius in New York between March 1 and August 4, 2004, your invoice does not have to state the $3,000 hybrid cost differential. Here's the form:

Amendment to the Alternative Fuels Credits and Exemptions

Though I don't think the link came through (I just copied and pasted here), take note. The forms required are downloadable from NYS. Thanks for providing it, Altaskier.

Also, I heard for the year 2003, that the tax credit was a refund to your state taxes paid, and that if you did not pay $2000 worth of state taxes that year, you could carry over the balance to next year's state income tax. I don't have documentation for this, however, noer do I kow if it was carried over for 2004.

Sharon

 

Ah, then it does sound like a credit and not a deduction for the NY income tax.

Not that confusing. It's the same concept as deciding on standard deduction or itemize. Just figure out which is bigger.

If your income tax paid to your state is bigger than the deduction you can take for sales tax, then stick with the income tax deduction for federal. Otherwise, skip the income tax deduction from federal, and calculate the sales tax deduction.

Sales tax deduction can be itemized (does anyone have receipts for everything they bought?), or you can figure it out from a table. If you chose the table you can add to it actual sales tax paid for certain big ticket items including the prius.

It has been establishe that NYS has re-instated the tax credit. That form you mention proves it. It is dated sept 20th 2004. Besides, the federal has the same incremental requirement, and has provided forms indicating what hybrids meet the $3K requirement. That should be proof enough.

 

Dan wrote:

"If your income tax paid to your state is bigger than the deduction you can take for sales tax, then stick with the income tax deduction for federal. Otherwise, skip the income tax deduction from federal, and calculate the sales tax deduction.

Sales tax deduction can be itemized (does anyone have receipts for everything they bought?), or you can figure it out from a table. If you chose the table you can add to it actual sales tax paid for certain big ticket items including the prius. "

So, you are talking about all sales taxes paid to NY for the year, not just the $3000 sales tax exemption for the prius? I can still get my hybrid vehicle sales tax credit for the prius 'cause it has nothing to do with the deduction, right? And, I would have to subtract $3K from my total cost, since I won't have actually paid it once I get the credit?

Thanks

Sharon

 

People, this isn't rocket science. Keep your NYS income tax separate from your federal income tax separate from your sales tax.

What you got back as a sales tax refund based on the $3K exemption cannot be claimed as a deduction. The reason an exemption amount was specified, rather than the refund amount, is because that can vary in different areas of the state. NYS sales tax is only 4%, but certain localities impose additional tax. The $262.50 refund only applies to NYC or other areas that have an 8.75% total sales tax rate.

Don't confuse the tax, with what is being taxed.
Don't confuse credit, with deduction.
Do compare your income tax deduction with your potential sales tax deduction, and take the bigger one. The first thing you need to figure out is how much sales tax did you spend. This can be actual, or estimated with big item tax paid added on.

If you have specifics you need help with, PM me and I will try to help.

 

I purchased my prius out of state. When i bought the car I paid no sales tax. I paid the sales tax directly to the New York DMV when I registered the car. I asked about the tax credit at the DMV and was told they had no information regarding the credit, so I would have to file for that separately. Does anyone know how I might get the sales tax credit in this situation? Thank you.

 

Same as if you bought it from a dealer I would imagine.