Another interesting Tax Credit Question

<div class='quotetop'>QUOTE(Three60guy @ Sep 13 2006, 10:03 PM) [snapback]319257[/snapback]</div>

The dealer is correct:

Summary of the Credit for Qualified Hybrid Vehicles

 

I'll give you a twist that I just realized....I just got an 06 and have kids, both in daycare. I was previously just taking the dependent care credit instead of putting pretax money into a flex plan so that I can pay for daycare with pretax dollars. Because I estimate I'm going to come close to having the credit eliminated/reduced because of AMT/TMT, I just had my wife allocate a bunch of her income for the rest of the year into that flex plan. That way there will be one less credit on our 1040 that might cause us to lose the benefit of the Prius credit.

 

<div class='quotetop'>QUOTE(Three60guy @ Sep 13 2006, 07:03 PM) [snapback]319257[/snapback]</div>

As of right now, that is correct. But it's a pretty short list so far.

IRS Notice 2006-9 (Adobe PDF file), "Credit for New Qualified Alternative Motor Vehicles (Advanced Lean Burn Technology Motor Vehicles and Qualified Hybrid Motor Vehicles)", requires in its Section 5 that the manufacturer or domestic distributor file a bunch of paperwork on the model in question with the IRS and that the IRS supply an acknowledgement. It is my guess that all that paperwork has simply not yet cleared with respect to the 2007 Prius. The 2007 Camry hybrid is there, but it is a special case, having been released halfway through the 2006 model year as a 2007 model.

At this time last year, there was no official list of qualifying vehicles; that did not start appearing until early 2006. At first all we had to go on were the educated guesses of some experts in the field. So those of us who bought our hybrids early in 2006 did so on faith that our vehicles qualified.

 

<div class='quotetop'>QUOTE(highroute @ Sep 14 2006, 06:55 AM) [snapback]319454[/snapback]</div>

Everyone seems to think that there is a great tax credit. Read the fine print. To qualify, you must meet all the requirements. If you do not file the long form, NO TAX CREDIT! Then again, if you do fill a long form, then you still do not make out on what they claim.
This past filing, 2005, for our 2005 Prius, only allowed far less than what they tell you. When it was all said and done: $25.00 increase in the refund. Credits are all well in grand for those who have a lot of deductions. The best thing to do is just sit back and enjoy the savings at the Gas Pump. Beware; the fine print for a state credit. The State Credit is limited to a small list of states in the U.S.A. for any type of credit issued by your state.

 

<div class='quotetop'>QUOTE(Little Buddys' Car @ Sep 25 2006, 01:02 AM) [snapback]324562[/snapback]</div>

I think these statements are misleading. While it is true that to qualify for this federal income tax credit you must meet all the requirements, that is true for everything in life. While it is true that a taxpayer must file the 1040 long form in order to claim this credit, that is true of almost all federal income tax credits and deductions, and in addition, any individual taxpayer can and may file the 1040 long form. Yes, the long form is more work than the 1040-A or the 1040-EZ, but the benefit of doing that work is substantial for some taxpayers.

It is true that in order to benefit fully from the credit a taxpayer will need to have computed tax that is high enough to be offset by the credit. For example, if you qualify for a credit of $3150 but your computed tax is only $2500, your benefit will be no more than $2500. In addition, taxpayers who end up being subject to the Alternative Minimum Tax (AMT) will not benefit much if at all from the credit, as with most credits.

Please do not mislead the readers of this thread by confusing the 2006 tax credit with the 2005 tax deduction and by implying that your experience with the deduction on your 2005 return applies to all those who plan to claim the credit on their 2006 returns. Those who claim itemized deductions, like the 2005 hybrid deduction, need to get beyond a threshhold before those deductions start to benefit them. That is not true for credits.

 

<div class='quotetop'>QUOTE(Little Buddys' Car @ Sep 25 2006, 04:02 AM) [snapback]324562[/snapback]</div>

There is so much I could take issue with in this post, but "Credits are all well in grand for those who have a lot of deductions" is just flat out wrong for the Prius credit. Those with fewer deductions are less likely to hit the AMT/TMT and therefore more likely to get to use the full credit.

Who is working on that definitive tax credit post that can be stickied up top?

 

<div class='quotetop'>QUOTE(highroute @ Sep 25 2006, 09:36 AM) [snapback]324705[/snapback]</div>

I was just going to say that. There's a BIG difference between a deduction and a credit. I waited an extra 4 months for my Prius so I could take delivery of it in 2006 in order to qualify for the credit, rather than just the deduction that was available in 2005.

 

<div class='quotetop'>QUOTE(Three60guy @ Sep 13 2006, 06:03 PM) [snapback]319257[/snapback]</div>

The IRS just posted this.

http://www.irs.gov/newsroom/article/0,,id=157632,00.html
It looks like the 2007 now qualify. I called the IRS today and they verified it for me.

 

ldlau: thank you, that is GREAT news! I have a 2007 on order to arrive any day now. I wouldn't qualify for the full credit, so taking delivery after Oct 1st for a $1575 credit is fine. Phew!

 

<div class='quotetop'>QUOTE(ldlau @ Sep 29 2006, 07:00 PM) [snapback]325877[/snapback]</div>

Thanks for the link. I just picked up my 2007 base on 9/29. I am already thrilled by the mileage (from trip home and joy ride), and now even more thrilled that IRS already added 07 Prius on list. If any of you are wondering, 2007 seems to have landed mainly in NoCal, Oregon, and a few patches in SoCal and Midwest. So if you call dealers today (9/30) some may have them.

 

<div class='quotetop'>QUOTE(lkmcookie @ Sep 29 2006, 11:01 PM) [snapback]325949[/snapback]</div>

No Problem,

do you have to take delivery of the car today in order to qualify for the tax credit? I still have not purchased mine, but am suppose to buy the sign the papers today and purchase it from them.The dealer told me I was ok if we sign the papers, as long as I have the VIN number, but I take possesion next week. Is that true?

 

<_< There are mixed opinions on this - here's a link to an long thread on the subject. Concensus seems to be you must take delivery.

Tax Credit