2006 Tax Credit - NOT!

But, just as a warning to everyone, you do have to fill out the AMT form 6251 if you're taking the hybrid credit.

--
Keith (who's getting exactly $0 of his $3150 credit from the feds...and who's a bit peeved about it...)

 

Anyone else in the same boat?
[/quote]
Same boat but sinking faster. Filing my joint return: AGI = $97,000, with standard deduction taxable income = $70,200, $1,980 in educational tax credits, regular tax = $10,671, Tentative minimum tax = $8,962. Result... Alternative MV Credit is completely lost! SUNK by the AMT torpedo! This was one big chicken that never hatched...sorry I counted on it.

 

First post and I do hate it to be a complaint but...

I didn't buy a Prius for tax credit but it was nice to find out about it a few months after my purchase. Little did I know it was going to be such a difficult ordeal. Well, I bought my Prius in June of '06. Looking at the chart available on Toyota's site, I fell into the window for full credit. I looked up some info on it and saw that getting full credit was next to impossible. That's ok as long as I can get something. I don't even think my state has any tax credits for hybrids but it was worth a shot.

I went to do my taxes today at Jackson Hewlett (Tax service agency) in Maryland. I printed out what was available from the Toyota website (Including the new 8910). I gave it to the tax agent and they had never dealt with the issue before so they called someone else to get an answer. At first she put me for something other than the Alternative Motor vehicle Credit savings thing. Well, that got me no kind of credit. I asked to make sure I was being put in for the right thing. I was told that I could not get a Tax Credit on my return because:
A) I do not own a business.
B) I do not use my Prius for business use.
C) I do not owe AMT.

I stopped right there with the prius issue. I wanted to go back home and bring some proof but it's snowing pretty bad here in Maryland. I decided to use this postponement to seek advice from this forum on the issue.

P.S. I don't use TT because the one and only time I did, I owed a ton back. Which means that clearly, accounting is not my thing!

 

The credit is on Turbotax now. I did it ast night and would have qualified for the full credit. I was not aware that this credit cannot be carried over to the next year, and actually have enough deductions that I won't be able to take advantage of the credit at all.

I guess Colorado has a tax credit, so at east there's that. I'm not sure how much it is though. THe 3150 sure sounded nice, but I believe Colorado's is much less.

 

<div class='quotetop'>QUOTE(chinito77 @ Feb 13 2007, 04:23 PM) [snapback]389724[/snapback]</div>

With all due respect two words come to mind when thinking about your JH preparers--Criminally Incompetent. If you haven't paid them, don't go back. If you feel you must go back take the forms and instructions from the sticky thread I started and have them completed. Since I wouldn't trust them as far as I can throw them I would go to www.taxact.com and download their free program. Punch in your numbers and see if you get the same result. IMO walk in tax preparer offices should be held in the same respect as Jiffy Lubes. :angry:


Chinito77,

Your situation made me so mad I forgot to welcome you to the site. Welcome to the site. Come for the tax info but stay for the car info.

 

<div class='quotetop'>QUOTE(MarinJohn @ Feb 5 2007, 11:33 AM) [snapback]385553[/snapback]</div>

Don't hold your breath. Restructuring the AMT would be a tax cut for higher incomes. Not a lot of love for that - especially among the party running things now. You'll get politicians to "feel your pain." But they are not going to get off their butts and change it.

 

My wife told me yesterday that she heard from our tax accountent and im getting back just over $1500.We are not rich! just average income people.I bought the car in june so was expecting more.Oh well! glad i didnt spend more than i thought i was getting back so far :lol: .I should of expected this to happen!this is the US government who is handleing it.

 

<div class='quotetop'>QUOTE(jrlittlejr @ Feb 4 2007, 11:24 PM) [snapback]385442[/snapback]</div>

<div class='quotetop'>QUOTE(jrlittlejr @ Feb 4 2007, 11:24 PM) [snapback]385442[/snapback]</div>

Absolutely!!!! just learned the same thing the hard way at my accountants office. No complaints, I consider myself lucky to have the problem.....but!!!!
It seems so counter-productive and asinine to encourage a more eco-friendly life, and on the other hand remove any incentive to do so. The word "penalty" for doing well and contributing to the coffers of the US/IRS seems to be to harsh a word, but.............

 

Well, I went back to my local Tax Service place and after much arguing, another lady was able to help me. The original person kept insisting that I get nothing because my vehicle wasn't placed in "service" as per 8910 which applies to only those who own a business. Well, I got lucky that someone else helped me out this time. They did the 8910 for me and behold... there was credit!

Now, someone help me out here please. The credit is so pathetic that I don't think it was added up right. So here are highlights from my 8910 as follows:

1) Year, make, model = 2006, Toyota, Prius
2) Enter date vehicle was placed in service = 6/3/06
3) Maximum credit allowed = $3,150
4) Phaseout percent = 100%
5) Tentative credit = 3,150
6) Business use percent = 0%
7) Multiply line 5 by line 6 = 0

11) Subtract line 7 from line 5 = 3,150
12) Add columns A through c on line 11 = 3,150
13) Regular tax before credit = 1,761
14b) Credits from form 1040, lines 48 through 54 = 1,520
14d) Add lines 14a through 14c = 1520
15) Net regular tax = 241
16) Tentative minimum tax = 0
17) Subtract line 16 from 15 = 241
18) Personal use part of credit = 241

So there is my whopping Hybrid tax credit for someone filing Married Jointly with 2 exemptions with 4 W-2's. Questions or comments?

 

<div class='quotetop'>QUOTE(chinito77 @ Feb 20 2007, 06:20 PM) [snapback]393572[/snapback]</div>

Since the hybrid credit can not be carried forward it can only reduce your tax to $0. With no other credits it would take a taxable income (line 43) of $26050 to use the entire hybrid credit. I hope you enjoy the car for many years and that you didn't get in over your head.

 

<div class='quotetop'>QUOTE(chinito77 @ Feb 20 2007, 07:20 PM) [snapback]393572[/snapback]</div>

If you haven't filed yet....
Rather than file Joint federal, Try the thing most people say USUALLY results in a higher tax for couples, Try Married filing seperately.
If your spouse has any income at all it will work for one of you to use the Tax Credit and you will come out better.....Just take the time to figure it that way....It worked for me very well...I used the Child tax credit, and my Job expenses for deductions (Both of you will have to itemize for it to work- per IRS Rules- if one spouse itemizes on sep returns both must itemize), and my wife used the mortgage interest and used the Hybrid tax credit..... The Prius has both names on it, so either of us could use it according to my CPA at work.
May not work in your situation, but in mine it was the only way...Jointly the whole credit was ZERO after that darned Tentative TAX mess...

Hope it works for you!

 

<div class='quotetop'>QUOTE(ohgreys @ Feb 5 2007, 08:52 AM) [snapback]385540[/snapback]</div>

My $3150 credit turned into a $38 credit for exactly this reason! Aaargh!

 

<div class='quotetop'>QUOTE(harrv @ Feb 25 2007, 12:58 AM) [snapback]396111[/snapback]</div>

We bought 2007 Prius Touring in November 2006, so I did not expect more than the 1/2 refund. My wife handles the trips to the tax preparer (CPA). They tell her unless we use the car full time for business we can only deduct 1/2 of the 1/2 tax credit. I am self employed and do not draw a salary and my wife draws a salary from the company. We do pay taxes. I have not seen anyone mention this reason for lowering the credit? I know this is not enough information for exact credit information, I was just curious about the reason in general how they determined I can only get 1/2 of 1/2 credit $787.50? They have not finished the returns as my wife is still working on other figures. I guess I missed something.

 

auart: thanks for the married filing separately suggestion. It looks like my husband and I will recover about $1000 of the credit thanks to filing separately. Filing together would have been $0. Makes me a little happier but it still was a shock to not get the full credit. Does anyone know where it was stated in the tax law that you couldn't get the full credit if you had other credits? My husband thinks I missed something but I don't recall that being stated. I heard about the AMT thing but we don't have to pay AMT so I thought we were OK. Hope your advice can help someone else.

 

<div class='quotetop'>QUOTE(bsd43 @ Feb 5 2007, 02:37 AM) [snapback]385444[/snapback]</div>

Lets face it we were swindled. The IRS knew exactly what they were doing and purposely didn't reveal the whole picture. I too didn't find out about this until I sat down with my tax man....I was and still am outraged. I will write but will it do us any good....yeah right!

On the bright side those of us that have the stickers on our car make the car that much more in demand that those that down't.....unless, of course, they change that law too.

 

<div class='quotetop'>QUOTE(susjc @ Feb 25 2007, 07:22 PM) [snapback]396488[/snapback]</div>

For me, it was because of the concept of "tentative minimum tax". I got deductions and credits for a few other things (tuition, children, and alimony I pay) but the IRS set my tentative minimum tax at $7000 and there was no way for me to get under that amount.

I tried the filing separately trick, but that didn't pan out because the house and car are only in my name, and even though my wife is the one in school, she couldn't claim any tuition deduction or credit if we filed separately.

Back when the credit was introduced, people were warning us of AMT, but I didn't see any talk of tentative minimum tax. Guess I would have had to be a tax professional to realize that I'd only get a $38 benefit from buying my Prius. :angry:

 

<div class='quotetop'>QUOTE(mrg @ Feb 25 2007, 08:36 PM) [snapback]396468[/snapback]</div>

You do not need to use the Prius for business in order to claim all or part of the credit. Either your tax preparer is wrong or your wife misunderstood the reason for the reduction in your credit. (Can't be sure without actually looking at your numbers.)

 

The Oregon Tax Credit came up to bite me.

I live in Washington, but since I work in Oregon, they make me pay income tax, even though they won't let me vote on anything. I was convinced I could get the Oregon Tax Credit when I bought the car, but then I found out is it a "Residential" tax credit. What gives? If I pay the same taxes, I should get the same credits. I am still reducing polution on Oregon's roads. I guess it is time to start hijacking trucks of Prius and throwoing them into the Columbia River. I will call this the "Vancouver Prius Party". But I don't want to do any harm to any Prius, so I will have to substitute Oregon Dept. of Energy people instead.

 

<div class='quotetop'>QUOTE(NoMoShocks @ Feb 26 2007, 02:25 PM) [snapback]396883[/snapback]</div>

I did get the whole $1500 Oregon state tax credit, but I could not get the whole $3150 because my tax situation. I missed out on about $1000. I had figured the $3150 tax credit into the price of the car. Oh well, there is an old saying, "Don't count your chickens before they hatch". Lesson learned

 

I'm not subject to the AMT, but I still won't be getting back the full refund due to the fact that they deduct any other credits you might get from the Hybrid credit (i.e. $1,000 child tax credit, $600 childcare credit). That's $1,600 off of the credit before it's applied to your tax liability. They don't make THAT public when you're purchasing. Yeesh!