How does one get the tax credit?

Its likely to be like other tax credits, where you claim it on the long form, Form 1040 (possibly the shorter versions too). I suspect there will be a check off box, and a table in the tax book that tells you how much each qualifying vehicle will receive (i.e., the Prius gets something like $3,150, other high mileage vehicles a lesser amount).

That's just a guess though. I haven't seen the tax forms for the 2006 tax year; you won't be able to file the taxes until after 12/31/2006 if you're like most people and on a regular calendar tax year.

 

The IRS will check the amount of the credit you claim against the credit you are entitled to based on:
when you took delivery of the vehicle,
whether your make/model is certified for a credit,
and the quarter in which the manufacturer reported selling 60k qualified hybrids.

The credit begins to phase out the quarter after the quarter following the sale of 60k hybrids by a manufacturer.
The reason why is that the law is written that way.

If you want to know why the law is written that way, that's a whole other discussion.

 

I think the IRS will probably rely on you to "verify" you are eligible for the credit from a worksheet. That's how most of the tax law works, and is why they tout "voluntary compliance" of Americans. In some cases they ask you to put in information (such as a child care provider's tax ID number) for other credits. But do you think they actually check each of those? They may ask for a contract number, VIN or data of purchase, or some other information, but I doubt they will ask for a copy of the contract.

Americans are basically honest when it comes to taxes because they fear audits and the penalties that come with them. Of the four people I know who have been audited in the last 10 years, one had a large tax bill (small business owner), two were found to be completely in compliance, and one actually got a refund. I know I never claim anything I don't think I can justify if I'm audited.

 

You would get it.

 

If you take possession before July 01, 2006 and your regular tax liability for 2006 is greater than your AMT by at least the full amount of the credit, estimated at $3150, you will qualify for the full credit.

If your regular tax liability is less than the the sum of your AMT plus the amount of the credit, you will only receive that portion of the credit which reduces your tax liability down to your AMT.
In simpler terms, you cannot reduce your tax liability below your AMT with this credit.

If you purchase after June 30, the credit may be reduced by half if Toyota sells 60k hybrids in the first quarter of 2006.
Otherwise, you have till September 30 before it begins to phase out.

 

i was audited a few years back- they sent me a copy of their calculations and sent me a bigger refund than i expected. i didn't complain.

i agree that taxpayers are generally honest, probably fear-driven honesty, but generally honest.

that said, i bet they'll have some kind of small worksheet to fill out to determine what number you put in the "hybrid credit" column or however they're going to do that.

 

When do you guys expect toyota to reach the 60k Mark ?


We have at least till May right ?

 

At least till June 30 before the credit can begin to phase out.

There's very good coverage of this topic in the Government_Incentives section of our FAQ.