Tax Credit still clear as mud!

Picked up my '06 SPM Friday the 29th. Was worried I was going to miss out on the full tax credit, but the delivery time was exactly 7 weeks from the day I put down the deposit, and dead on my 3 - 7 week quote given to me by the dealer. Nothing like cutting it close....on top of that I had dental surgery the morning I signed all the paper work. So, after the anesthesia wore off my wife and I headed to the dealer. Good thing I had been lurching on priuschat for a several weeks, and had everything I needed to ask and look for already written down. Thanks priuschat!!

 

<div class='quotetop'>QUOTE(billyboy @ Sep 30 2006, 07:07 PM) [snapback]326278[/snapback]</div>

I don't know if it's deliberate or simply incompetence. I did note the "purchase or place in service" in the latest update. To further confuse things the instructions for entering the percentage of the tax credit being calimed on form 8910 talk about date of purchase, while the only date you're asked to enter on the form is "date placed in service". If I had to guess I'd guess that I'm glad I both purchased and placed in service before the end of Sept. I think if you completed a "purchase" before the end of Sept. and you place the car in service during 2006 you've got a leg, but who knows what will happen. The more I think of it, the more I lean towards incompetence. The one time I had something questioned on my return I literally had to walk the guy through the return to show him the answers to his questions which were all contained in the return as submitted. Oh, Okay, then there was the other time, when they wrote to say I never paid and I had to send tem of copy of the check deposited by the IRS on April 14. But other than that, they've really got it going on.

 

<div class='quotetop'>QUOTE(billyboy @ Sep 30 2006, 10:07 PM) [snapback]326278[/snapback]</div>

Yes, that is a bit confusing. Then again, you never complete the "purchase" process until you take delivery. You may make a downpayment and sign a Buyer's order or purchase agreement, but you have not purchased it until the day you arrive to take it home. Until then, you can still back out of the deal. But then if that's the case, why have they changed the wording? Could you actually pay the full amount without receiving the car? How could you complete the purchase without completing all the paperwork (title, etc.) which obviously you can't complete until you have the car sitting there ready to go?

 

<div class='quotetop'>QUOTE(billyboy @ Sep 30 2006, 09:07 PM) [snapback]326278[/snapback]</div>

OR means or. It does not say AND. As long as you purchased it OR placed it in serviced within the prescribed time, you are okay. I could have purchased a prius in January of 2006 before I actually took delivery OR bought it in March when I took delivery. If you read through Form 8910, they use the phrase "placed in service" because in Part II of the form it discusses business or investment credit, which usually refer to dates for things like depreciation, etc.

That's my take on it.

 

<div class='quotetop'>QUOTE(prez1 @ Oct 20 2006, 01:32 PM) [snapback]335810[/snapback]</div>

but if you look at the actual form, there's nothing about "purchase", just "date vehicle placed in service".

 

So, I guess I'll be only getting $1575 tax credit when I get my prius within the months of October, November and December 2006.

Please correct me if I'm wrong.

 

<div class='quotetop'>QUOTE(PA @ Oct 5 2006, 05:49 PM) [snapback]328717[/snapback]</div>

PA - you may be right but I'm looking at it a little differently. I looked after all the paperwork at the dealership and paid for the car in September. I had the car insured as of that date. As far as the dealership and I were concerned, the transaction was completed as to the transfer of title. The car was in the US but needed to be shipped from one Toyota lot to another. When it arrived on October 2, I took the keys and drove off. Toyota says I'm entitled to the full credit and although I can't rely on their advice or interpretation of the tax code, I think they're correct on this.

 

<div class='quotetop'>QUOTE(billyboy @ Sep 30 2006, 08:07 PM) [snapback]326278[/snapback]</div>

What does this mean?

I have taxes taken out of my check every payday. Does that mean that money is not owed? What is the definition of "taxes owed?" I normally get money back every year and I am worried this might mean I won't be able to get my tax deduction. So is taxes owed what I still owe, or is taxes owed what I have to pay for the whole year?

 

well i made it on any interpretation and for the estimated few thousand that may not, well...bummer

BUT

for the estimated 20-30% of those few thousand that qualify for the full credit under any circumstances (yes we Prius owners are in the upper half of society. although i am not in that category)

so now we are looking at maybe several hundred... so it goes.

 

<div class='quotetop'>QUOTE(Cheap! @ Oct 31 2006, 11:21 AM) [snapback]341229[/snapback]</div>

The definition of taxes owed is just that - the total amount of taxes that you owe the government. This includes both what you calculate at the end of the year and send them a check for, and whatever you've already paid (through payroll deductions).

So if you pay in 1k per month from your paycheck, and at the end of the year write a check to the government for another 2k, your taxes owed for the year is 14k.

on the other hand, if you pay in 1k each month and at the end of the year get a refund check for 2k, your taxes owed is only 10k (and thus you overpaid and got the refund).

Tax credits work to reduce the taxes owed, which means at the end of the year you'll be getting a bigger refund check or paying less if you haven't paid much in during the year.