2005 Tax deduction

i hear ya. not that great of a tax break, but oh well. we still like the car

thanks for the reminder about the sales tax thing. may check into that...

 

Consider also how your purchase of the Prius is cost beneficial vs. whatever you had before. Based on 1 month of driving, I'm seeing an improvement of $120/month in fuel savings which would be $1440 annually. And I get that every year. Not bad. The tax deduction this year is just a bonus.

 

There's a really long thread already going on about this topic...check it out...got a little testy

 

The gist of your letter is you do not understand the concept of a deduction. If the deduction was $10000 you would still save 13%, in this case it would be $1300. in your tax bracket. It's STILL 13%. Many working stiffs think that the rich to middleclass well off are ripping everybody off with huge tax savings. The actual amount saved may be much larger for these people, but thats only because they pay much more. For the Gentleman in the 38% bracket he saved 38% of $2000 or $760. But he paid perhaps 100 to 200 Thousand Dollars in taxes. Be thankful to those that are paying large amounts in taxes, because if they did not have to.......YOU would pay more. Enjoy your Prius.

 

I'm with you. When I bought my Sport Trac 2 years ago the best thing I got was 1.9% financing but 15mpg eats up a whole lot of that savings. Now I get three times the MPG, 4.9 financing, extra time that I do not spend at the pump, or in the regular lanes instead of car pool lanes. You have to look at the whole picture. I'll take every thing I can get on the Prius and be happy for any savings along the way.
Learn to laugh at the idiots that like to waste gas by racing to that next light or going 90 all the time. There will always be gluttons in the world.

 

For those of you who are confused about tax terminology and refundable vs non-refundable credits, I just posted in Fred's House of Pancakes about income tax basics. I apologize in advance if I have unintentionally insulted anyone's intelligence with the very basic information there, but it sounded like there were some confused people posting here and elsewhere on these forums.

When you are asking about tax brackets, I believe that you are talking about marginal tax brackets. Remember that our taxes are progressive, the more you have in taxable income, the higher the precentage you pay in income taxes. For example, for a married filing jointly in 2004, they paid $.10 on each dollar of the first $14,300 or they were taxed at a 10% rate. For every dollar of taxable income they made between $14,301 and $58,100, they paid $.15 in Federal income taxes or 15%. The highest individual income tax bracket is 35%. In 2004 for married filing jointly that marginal tax bracket started at taxable income in excess of $391,101. Your marginal rate is the one discussed most often and is most easily understood fi you earned one additional dollar during the year, what percent of it would go to pay Federal income taxes.

 

Sorry doc, I did not have a chance to review the other 149,938 posts before posting..... I will try to do some searching before I post next time...

 

The incentives are supposed to make people think about buying a hybrid rather than a non-hybrid, because the hybrids cost more than a comparable car. Some people do buy hybrids because of the tax ramifications (I'm delaying my purchase to take advantage of a bigger incentive that becomes effective in 2006.)

You are lucky in one respect ... without your home mortgage deduction, you probably would not be able to claim the deduction at all. Congratulations! You are one of the wealthy in this country that can worry about tax deductions! Don't feel wealthy?

The median household income in 2003 was just over $43,000. That means that half of American households earn less than that. You are in the top half, my friend! And substantially so. You earn 50% more than half the households. 50% more!

I'm glad you get the deductions you get, because I believe you can decide how to spend your money much more wisely than the government can. The money you spend on your daughters now will make my life easier in the future, because they will grow up to be well adjusted, contributing members of society. But most people don't see it that way, and feel "tax breaks" are somehow immoral.

Since you are among the wealthy now, change your party registration to Republican first chance you get. Time to fight back, and that isn't done by simply posting your frustration in an on-line forum!

 

just a note about the state sales/income tax write off... i'd like to specify you have to itemize your deductions to do that.

we're still screwed :angry:

 

To enjoy the $2000 deduction you have to have alot of other deductions, too. Otherwise, you just take the standard deduction.

I'm single, so for me the standard deduction is $4000. If I itemize and only claim the $2000 deduction for buying my car this year, then the standard deduction kicks in instead.

Now, I have alot more than $4000 in deductions already, mainly from claiming business use of my car (and some charitable contributions). Coupled with the Prius deduction, I'm looking at a total of roughly $9000 I can claim.*

The average person can't claim nearly that much. Unless you have major deductions, the Prius deduction may not even be of any use to you.


*I've posted elsewhere that I bought my car this year because the $3150 credit won't give me much more... maybe $400 if I waited. I've already saved that in gas! But my situation is unusual. Most people will benefit more by waiting for the '06 credit.

 

The deduction is taken on the bottom of page 1 of the 1040 in the section labeled adjustments. It is a totally separate deduction from itemized deductions. You can take the standard deduction and the clean fuel vehicle deduction. You do not have to itemized to claim the clean fuel deduction. Remember that the business milage rate went up to $.485 per mile for miles driven after August 31. It was $.405 for miles driven before September 1.

The single filing status' standard deduction for 2004 was $4850; for 2005, it is $5000.

I posted in Fred's House of Pancakes with more complete info on the deduction and credit.

 

Bummer <_<
Maybe the info cmympg is posting can help....

 

From the 2005_Tax_Deduction_Incentive section of the Toyota_Prius_FAQ:

2005 Tax Deduction Incentive
A deduction of $2000 is still in effect until the end of 2005.
Under the current law, those in the top tax bracket would realize a maximum tax savings of $700 if they purchase a hybrid vehicle before January 01, 2005.

How to Claim a Federal Tax Deduction
The Internal Revenue Service (IRS) requires that purchasers retain normal proof of purchase documentation as well as the Toyota Certification letter and Internal Revenue Service Acknowledgement letter as substantiation for the deduction.

Federal Tax Deduction Guidelines
The purchase of a new Prius (model years 2001 - 2005) must be completed on or before December 31, 2005, for the $2000 deduction.
Before using this important federal tax deduction on your tax return, please check with your tax advisor for possible additional state tax benefits and for any changes in the federal tax laws that might have occurred.
The federal tax deduction is not available for Prius lessees or purchasers of used Prius vehicles. To the extent applicable, this deduction is available to Prius purchasers regardless of whether you itemize deductions on your federal income tax return.

Your overall federal tax benefit will depend on your individual tax situation, particularly if you claim depreciation deductions on your Prius. See your tax advisor for more details.

 

Believe it or not, you're rich. At 64K, you are well into the top 25% of income tax filers. You only needed an Adjusted Gross Income (AGI) of $57,343 to make it into the top 25% in 2003. (AGI is before deductions such as mortgage and Prius) The top 25% of tax filers paid 83.88% of the Federal taxes in 2003. The top 10% (AGI of $94,891) paid 65.84% of the Federal Taxes. The top 5% (AGI of 130,080) paid 54.36% of Federal Taxes. And the top 1% paid 34.27%.

And conversely, the bottom 75% of tax filers paid only 16.12% of the Federal taxes in 2003. The bottom 50% of tax filers paid only 3.46% of the Federal taxes in 2003.

I bet you didn't realize that you were rich. When you hear talk about taxing the rich, look in the mirror, because they're talking about you.

Summary of Federal Individual Income Tax Data