What is the latest on the federal tax credit for 2021?

70,000+ Toyota credits still available as of June 2020:

See Federal EV credit.

 

One typically files taxes for the previous year. A Prius Prime purchased this year, if eligible, would be used in your 2021 (next years) return. See IRS 8936 or Publication 17 for clarification.

 

As stated by @pghyndman, the tax you will file this year is for the tax year 2020. If you bought PP and put it in use before Dec 31, 2020, then you can claim the tax credit this year regardless of the model year of the car you purchased. If your purchase was after Jan 1, 2021, then you will have to wait till next year (2022) to file for the tax credit on your income tax return.

 

You'd trust what a dealer says?

Look at your 2019 tax form 1040. Look at line 16, "Total tax." If this amount is less than the Prime credit of $4502, then the amount of line 16 is all the credit you'd have gotten for a Prime bought in 2019. On the 2020 tax form 1040 your "Total tax" will be line 24. It'll work the same way.

Some states have tax benefits for buying a plug in hybrid, and some don't.

 

This is a little off topic but if your tax liability is less than the full credit, there are a few ways to increase the tax liability so that one can use the full credit. One sure way to increase the tax liability is to increase the taxable income. I am planning to purchase a BEV or a PHEV this year with a $7500 tax credit. But my usual tax liability is not this high. Thus I will make sure I will have extra taxable income this year to increase the tax liability.

 

Totally off topic: If you're over age 70-1/2 and have certain tax deferred retirement accounts including an IRA you can make qualified charitable donations directly from your IRA to any charity. That's a tax free way to take money out of the IRA, and it never shows as adjusted gross income on your tax return. It's better than a deduction. Consult your IRA custodian and your tax advisor.

 

While that might be helpful to a charity, it wouldn't be helpful to me. Say I take $2000 out of my IRA and donate it to a charity. I am now $2000 poorer. If I take out the same $2000 and pay the approx. $300 taxes on it I am only $300. poorer.

 

Yep. and you'll get a warm fuzzy feeling having done so during these tough times so many charities are experiencing. Alternatively, you may consider converting a traditional IRA to Roth. You'll be taxed now but the Roth can continue to grow and you will not incur taxes later, nor will you have to take Required Minimum Distributions (RMD forgiven this year).

 

There are several other threads here with posts describing what happened when Tesla and GM hit their caps. When the 200,000 vehicle cap is reached, the full tax credit remains available to all buyers for the rest of that calendar quarter, and the next calendar quarter. Then the phase-out continues for another full year -- 50% for 2 quarters (6 months), and 25% credit for 2 more quarters.

There is bureaucracy involved getting all the sales figures in, finding that the cap is reached, then the IRS giving advance legal notice about when the full credit ends.

The effective result is that, from the day a manufacturer's 200,000th qualifying vehicle is sold, the full credit remains available for subsequent buyers for at least 3 months, but no more than 6 months. Then the phase-out begins.

And beware that the cap doesn't mean 200,000 Prius Primes. Original Prius Plug-ins, RAV4 EVs, and new RAV4 Primes are counted in the same cap.

How close is Toyota to 200,000 sales of Plug_ins? | PriusChat
New Prime purchase. About the federal rebate | Page 2 | PriusChat
New Prime purchase. About the federal rebate | Page 4 | PriusChat

 

I just did my taxes and after i added i use my prime for 10% business i lost $500 off that $4502

anything i can do to get that $500 back

 

Is that tied to claiming some of the Prime's operating costs as deductible business expenses? Is so, then you are probably in a "both or neither" situation.

 

We got our 2018 Premium 12/2018, traded for a 2020 Limited 1/2020, and traded that for our 2021 Limited yesterday. We have two other vehicles, but the Primes get the most use by far. After all taxes, rebates, etc, each trade cost between $1k and $2K or so... not a profit, but good enough in my book to move to a new vehicle, each always brings more features that we do use.

Congrats on your Limited... you'll love it!

Below are the "old" Blue Magnetism 2020 and new 2021 Titanium Glow at the dealer: