Announcement Today?

I got a detailed email from Toyota Sunnyvale. It lists all packages that we will get here as well as colors and it says that all orders from now on will be 2006, Prii should "start arriving at the end of November".

Woohoo, my price for my 2006 package #8 is $28,641 plus sales tax / license fees - $5000 taxable google - tax deduction (I will try 2005 delivery since due to my high mortgage to income imbalance, I would probably get hit with AMT and therefore forfeit the deduction).

 

:huh: $5000 taxable google - tax deduction?
Could you elaborate?

 

$5000 google mployee incentive, which is taxed as compensation, so its not like subtracting $5000 off the sticker. Then I expect delivery before 1/1/2006, so I will take the $2000 hybrid tax deduction, which nets me maybe an effective 650 additional off of MSRP.

So full equations is

Pkg#8 @ MSRP
- $700 dealer discount to Google employees
- $5000 from google (taxed)
- wahtever the IRS gives back on deduction ~$650

= How the heck could I pass this up! BTW I am going from '85 vette ~ 20 mpg -> Prius

 

Good deal!

 

I seem to recall that mortgage interest is not an AMT preference item (like taxes paid), but could be wrong...you might want to confirm that.

 

Damn! Only one per employee? Can you get me one and I'll pay to have it shipped? B)

 

Well, they haven't updated the Prius page at Toyota.com with the new model info yet. To me, that will be the "official" point.

 

Itemized deductions that are allowed for AMT are:
- mortgage interest for purchase or remodeling of your home
- medical/dental expenses above 10% of AGI
- charitable gifts
- casualty and theft losses
- some miscellaneous deductions

Some itemized deductions that are not allowed for AMT are:
- state and local income taxes
- real and personal property taxes
- loan interest not related to buying or improving your home

AMT allows fewer itemized deductions than the regular tax calculation. However, the AMT exemption is larger than the personal exemption.

Regular taxable income is taxed at 10%, 15%, 25%, 28%, 31%, and 35% in a progressive manner. Income subject to AMT is taxed at 26% and 28%, also progressive.

AMT used to be for the richest people, but it's affecting an increasing number of the middle class. A lot of people seem to think that they will get the full $3150 tax credit by buying a Prius in early 2006. It's better to crunch the numbers now and find out for sure than to get a nasty surprise in April 2007.

See the H&R Block 2005 AMT Estimator

 

Good post but link broken:
HRBlock.com - H&R Block 2005 AMT Estimator

I have added this information to the Toyota Prius FAQ
B)

 

I agree... I wonder when they will finally do it! LOL

 

I'm confused. If you are subject to the Alternative Minimum Tax, does the 2006 tax credit not apply??

 

That's correct. You effectively lose the entire tax credit. But that's not all. You can also lose part of the tax credit.

TaxOwed = max(RegTax - TaxCredit, AMT);

 

Right, the tax credit cannot reduce your taxes below your AMT.

 

Thanks

I also edited the original post to fix the error.