Hybrid tax credit bait and switch

I hope my accountant can get me the tax credit I anticipated, with is around $1300.

It would take an accountant to figure out that article.

Harry

 

<div class='quotetop'>QUOTE(Prianista @ Jan 26 2007, 12:15 PM) [snapback]381115[/snapback]</div>

Glancing at the article, it appears if you earned under 200k you're in pretty good shape as well, although I would certainly be glad to hear what JimN thinks of this.

>>Singles do much better. They can get the full credit with income anywhere between about $25,000 and $115,000. This disparity reflects the fact that the AMT incorporates a hefty marriage penalty, and is structured to be anti-child. The larger your family, the harder it is to escape AMT; even if you do escape, the margin of escape tends to be small, which means your hybrid tax credit will be correspondingly reduced.

Single or married, it is virtually impossible for California homeowners with incomes between $200,000 and $500,000 to escape the AMT. If this is your situation, your hybrid tax credit will almost certainly be zero. In general, as income rises above $100,000, the allowable credit begins to drop rapidly, especially for larger families. <<

 

<div class='quotetop'>QUOTE(MegansPrius @ Jan 26 2007, 08:40 AM) [snapback]381134[/snapback]</div>

Another reason to be happy that I took 10 months off last year to rest and revitalize.

Cheers.

 

Conversely, the very best way to escape the AMT and be eligible for a full hybrid tax credit is to earn upward of a million dollars.

The best way to make sense of this oddly structured tax credit is to see it as the apotheosis of Republican tax policy: that tax relief is properly reserved for those who pay the most taxes (i.e., millionaires).

:blink:

~E

 

Single and childless here, so I guess I can be less scared now.

It's hard for me with an income nowhere near 6 figures to really feel bad for people making between 200 and 500k. Maybe that's wrong of me, but if you're making a half million a year, what's $3150?

 

This article seems to be saying something different:

Neither is the sometimes hefty tax credit for purchasing a qualified hybrid car. "If you're in AMT, you don't get that credit," said Francois Hechinger, a partner with BDO Seidman, in San Francisco. "I just called a client to tell him, 'You're not going to get that. You're in the AMT. He said, 'That lousy [car] salesman. He didn't tell me that one.'"

http://www.nasdaq.com/aspxcontent/NewsStor...000015.htm&

~E

 

<div class='quotetop'>QUOTE(excuseMeButt @ Jan 26 2007, 02:47 PM) [snapback]381238[/snapback]</div>

Not really. The nasdaq link you posted pretty much agrees with the earlier article, i.e, you need to worry about it if you're affluent (>125K$ combined income in nasdaq, >$200k combined income in SFGate). Some of us poor buggers should get the credit just fine.

From Nasdaq article >>"If you're single and make more than $75,000 or a married couple with income of $125,000 or more, it's time to do or pay for the additional computation," LeValley said<<

 

I looked at the form 8910 and it appears to me that if your Regular Tax is greater than your TMT you get the credit depending on how much difference there is. I am not a tax expert and haven't prepared my taxes yet but it appears that I will get at least some of the credit.

~E

 

Are new Prius owners receiving a notice from Toyota for varification of tax credit eligibilty? I thought I read someplace that three proofs will be necessary in the event of an audit. A verification from Toyota, the Federal government, and sales receipt. Is this true or is it only the bill of sales?

 

<div class='quotetop'>QUOTE(pjr @ Jan 26 2007, 05:53 PM) [snapback]381355[/snapback]</div>

The IRS list of eligible vehicles is online at http://www.irs.gov/newsroom/article/0,,id=157632,00.html

See also http://www.irs.gov/newsroom/article/0,,id=157557,00.html

The revised form 8910 will likely be posted on the IRS website in February. If you have tax questions, there are numerous other threads on this site you can search. Priuschat member JimN is an accountant and may well have replied to questions you have already.

 

<div class='quotetop'>QUOTE(Prianista @ Jan 26 2007, 10:15 AM) [snapback]381115[/snapback]</div>

Yet another example of the Republican party working for you.

Not! And the wealthy get wealthier.

Check out Forbes:
http://www.forbes.com/manufacturing/2006/0...315beltway.html

and straight from the IRS (see "The Credit and the Alternative Minimum Tax")
http://www.irs.gov/newsroom/article/0,,id=165649,00.html

Hopefully the new Democratic congress will clean up this mess the Republicans heaped on us before April 15th. I think dubya's approval rating will hit the negative numbers from this issue.

 

<div class='quotetop'>QUOTE(MegansPrius @ Jan 26 2007, 05:03 PM) [snapback]381361[/snapback]</div>

I want to address several points here.

1. Documentation for the credit should be a non-issue. The IRS has posted approved amounts for various vehicles over various periods of time. I believe this link has all the information needed. Should you be questioned, you will need to document that you placed the car you listed on form 8910 in service when you did. The sales contract or maybe a registration should suffice.

2. AMT is really not about income, its about deductions. The premise was that people with "large" amounts of income who also had "large" amounts of deductions or shelters ended up paying little or no tax. Problem #1 is that the amount of income needed to trigger the AMT calculation hasn't changed. This makes more of the middle class subject to the calculation, not just "the rich".

There is only one absolute. If your tax liability does not at least equal the credit you won't qualify for the full credit. Tax liability can not be less than $0. Everyone's income, deductions, and credits are not the same. You will have to work through form 6251 to see what applies to you. I believe, as a general rule of thumb, the fewer deductions and credits one has, the better the chances of receiving the full credit.

I expect to see any number of articles about the tax credit published before April 15. They will all have certain things in common: No specifics, General doom & gloom, Gloating that "that hybrid" (and probably the Prius by name) wasn't as good a deal as the buyer thought. The tone will be the same as those which spread the FUD about how the very expensive batteries will need to be replaced, et al. Pay no attention.

3. Blaming only one party for a piece of legislation is wrong unless you can prove it passed on party lines. I'm sure Democrats voted for that bill as well. Did they understand what they voted on? Probably not. They probably didn't read it either. The best one could hope for is they read the "Cliff's Notes" synopsis before casting their votes. IMO this part of the discussion belongs in Fred's House of Pancakes.

4. Personally, I was irritated that I couldn't get any information pertaining to the tax credit from Toyota or the dealer. The salesman suggested that I would even have to get Toyota's sales figures from my accountant. (What's wrong with this picture?) In hindsight they were probably told not to discuss the credit at all or weren't informed about the credit in the first place. This credit isn't well publicized.

 

(Sigh) After practicing tax law for over a decade (just put my license in inactive status this year), it never fails to amuse me how every shloemo under the sun, just loves to dole out free tax advise ... including professor whats-his-name here. And if (s)he's wrong? The beauty of it is, there's NO consequences. Even when you get tax advise from the IRS, and they're wrong ... no consequences (well, they may fix their mess, but they aren't financially accountable to you). I'd tell you what the law is, but legally I'd have to pay another $300 to put my license back in active status to do so. Even then, there are gray areas, where the most knowledgable experts disagree. Preach on professor. You get what you pay for.

 

<div class='quotetop'>QUOTE(Zzyzx @ Jan 26 2007, 01:08 PM) [snapback]381216[/snapback]</div>

I must confess that I was thinking the same thing. Shouldn't someone making between $200 and $500k annually have been smart enough to know that the tax credit wouldn't apply to them in the first place? I wonder if there is anyone who didn't get the hybrid tax credit willing to swap their financial situation for someone who is eligible (well, someone on the lower end of the income spectrum, anyway).

I'd gladly give up my $3150 tax credit to be making between $200 and $500k annually...

 

<div class='quotetop'>QUOTE(hill @ Feb 5 2007, 07:52 PM) [snapback]385766[/snapback]</div>

Golly, I guess Priuschat would just be a better place if no one answered anyone's questions. Thank you for being so helpful. <_<

 

It's always better to be rich.

duh.

 

<div class='quotetop'>QUOTE(MegansPrius @ Feb 5 2007, 08:40 PM) [snapback]385787[/snapback]</div>

It's wonderful to have someone twist your words. The jist that you missed was that we ought to assure that we rely on answers from properly qualified experts, whether it's tax, property, hybrids, medicine, etc.

In CA, I can't count how many folks hang their shingle out that call (for example) their self, "financial planners". Typicly, they'll have an accounting drgree ... maybe even a CPA ... but there ARE no qualifications to hang a financial planner shingle. If they invest poorly for you, what are the ramifications? You loose your hard earned $$$. Ask your so called financial planner to make a living off the money (s)he makes you ~ and they'll look at you like you're some kind of a nut.

That being said, do you feel it's better to get tax advise from an unqualified tax expert? Ok, I just asked my 21 year old daughter (just got her business degeee). Her opinion of the Santa Clara business teacher is she thinks he's right. Is that 'helpful'? NO. The POINT I aparently failed to convey is that opinions mean NOTHING, unless the giver is responsible for you relying on the consequences. Sorry you don't find it helpful to hear, "only rely on experts who legally have to stand behind you".

 

<div class='quotetop'>QUOTE(hill @ Feb 6 2007, 01:44 PM) [snapback]386125[/snapback]</div>

Well, there's loads of people here posting erroneous Tax stuff. Just see anyone of the alarmist "you won't get the credit due to ATM" threads that are currently running. The "Professor" or as you so politely put it "every shloemo under the sun, just loves to dole out free tax advise " you find so inaccurate (and I understood you to mean JimN) is an accountant and quite helpfully calmed a bunch of misinformation when nobody could find the 8910 form. He even went to the bother to call his IRS rep and post that people shouldn't use the 2005 8910 as a number of people were advocating.

So pardon me for attacking your attack on one of the more reasonable posters we have on PriusChat regarding tax questions.

Hybridcars.com has a helpful FAQ regarding the Alternative miniumum tax.
http://www.hybridcars.com/hybrid-tax-credi...inimum-tax.html

 

Hey, I am new here and have a question about the tax credit.

We got our Prius at the beginning of August, and were told by our dealer that we would be getting a 3150.00 tax credit if the car was in our driveway by Sept. 1st. We were thrilled, and planned on putting that money directly on the car to help pay it off.

DH went to the tax lady yesterday and she said because of what he makes, and we have 3 kids (get a credit for each child )that we are at our limit on what we can get back. That we get 0.00 for the tax credit.

I called the dealer today, and he said that he hasn't had anyone else who has bought a Prius from him call and have that problem.

So after coming here and reading this, I can safely assume that she is correct about not being able to get anymore money for the tax credit? Or is it that she needs to have the 8910 form? Is that something I have to provide for her, or is it not available to her yet? Do we need to wait to finish up the taxes until after the 16th of this month? Will any of this make a difference on getting ANY money for the tax credit?

Love the care by the way. We went from a mini van to this car and all 3 of our kids and us (my dh is 6'4") can ride comfortable in this car from NE Alabama to N. Indiana (where we are from) to visit family and friends.
Just a bit disappointed about not getting the tax credit.

Thanks!
Brooke