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06 Alternative Minimum Tax question

Discussion in 'Gen 2 Prius Main Forum' started by sloopG, Dec 28, 2005.

  1. sloopG

    sloopG New Member

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    This question is for any tax experts out there who are familiar with the details of how Alternative Minimum Tax works.

    I just finished a projection of my 05 and 06 taxes. Due to a one time income payment in 06, I will probably be subject to Alternative Minimum Tax (of course). Unfortunately, I cannot defer the payment so I'm stuck with it as 06 income. I most likely will not be hit with AMT in subsequest years as my income returns back to normal levels typically not subject to AMT. Accordingly, I should be able to recover some if not all of the 06 AMT payment in my subsequest year tax returns (will probably take a few years but at least that part of the tax code works to my benefit).

    Here's the $3000 question: If I buy a Prius in 06, will the 06 tax credit be included in the AMT recovery amount for subsequent tax years or do I completely lose it because it could not be actually received in 06?
     
    #1 sloopG, Dec 28, 2005
  2. Kiloran

    Kiloran New Member

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    The short answer is "no".
    No part of the tax credit will carry over to years subsequent to the year the vehicle is put into service.
     
    #2 Kiloran, Dec 28, 2005
  3. Kiloran

    Kiloran New Member

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    Hybrid Tax Credit Strategies and Limitations

    Thanks, William Perez.
     
    #3 Kiloran, Dec 28, 2005
  4. QED

    QED New Member

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    Thanks, Kiloran

    That's the best explanation of the hybrid tax credit I have read. A must read for anyone buying or considering buying a hybrid.
     
    #4 QED, Dec 28, 2005
  5. sloopG

    sloopG New Member

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    Thanks for the information. Unfortunately, that kills the deal for me. Between not being elligible for the 06 tax credit and the price increase, it makes the car too expensive IMHO. I can wait a year or two for the car to start selling below MSRP.
     
    #5 sloopG, Dec 28, 2005
  6. larryenok

    larryenok New Member

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    As noted, any benefit lost in '06 should be considered your contribution to Mr Bush's deficit reduction program and will have no benefit on your return in future years.

    :angry:
     
    #6 larryenok, Dec 28, 2005
  7. syncmaster

    syncmaster Member

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    Vehicle:
    2010 Prius
    Model:
    III
    There is another way for you to get the equivilant of a tax credit and own a prius.
    I think alot of 05 prius owners are going to want to sell their 05 to get the new 06 and claim the tax credit . You should be able to get the 05 prius for for a reduced price close to the tax credit amount . Don't forget the 05 prius owner already took the tax deduction in the 05 year so he paid around $600.00 less for it.

    Just another way of looking at your problem.
     
    #7 syncmaster, Dec 28, 2005
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