Need 05 vs. 06 Purchase Advice

Thanks for the info..... I haven't stuck my nose into any of those threads.....

thanks....

 

Sounds like a fairly straightforward decision: are the added features of the '06 worth the cost difference to you?

I would not put much weight on re-sale differences if you expect to keep the car for a long time, because the more time that goes by, the less the difference will be. However, the longer you keep the car, the more time you will have to enjoy the added features (or regret not having them).

A big consideration is actual waiting time: Would you be able to get the '06 in January, or would you be on a 10-month waiting list? I ordered my '04 in November of '03 and got it in January of '04. Part of my brain said, Don't buy a new model its first year. But had I waited a year, I'd have missed out on a year of driving the coolest car in the universe.

Bottom line, in my opinion, assuming delivery dates to be similar for the '05 and '06 is a straightforward consideration of the cost of the added features. I'd love to have a back-up camera and iPod jack. But I would not pay $3,000 for them. On the other hand, if you are subject to the AMT you may have so much money that the features are worth it.

 

LEE get the 05 now and take the savings NOW. The 06 is marginally better, you can address most of its "shortcomings" compared to the 06 and the 06 would require you to wait until 2/1/07 (for the 2006 tax return filing) in order to get the funds back in your pocket.

 

If you're able to get the 2006 Prius this year and take the deduction, the difference would be less. That's something I'm seriously considering doing due to potential AMT next year, if my dealer will be able to get the car earlier.

 

Not necessarily so.
You can adjust your withholding so that you can realize 1/4 of the credit each quarter of 2006.
See 2006 Tax Credit Strategy, How to get your $ faster.

 

Sounds like a good thought... I"m not sure how it all works, but if you have an AMT that prevails.... would a deduction take off the amount you get back from unclesam?.. or rather the amount you have to pay him?

And if the answer is that it will "take off amount owed" then wouldn't a credit do all the more... even in the presence of the AMT?

I"m not trying to add confusion.... just make sure you don't miss out...
If you read the definition of how it works... http://en.wikibooks.org/wiki/Toyota_Prius_...redit_Incentive

Lets say your AMT is 2000.00 ... that means no matter what you do.. you cannot get away without paying at least 2000.00 to uncle sam right... irregardless of what deductions you may have?
If you are going to be able to definately get to the minimum AMT and only pay what that figure is.. then the credit will not benifit... "but" if you will pay more.. then the credit will!... I don't know your situation completely, but if you will pay 3100.00 more than your AMT.. then you would be able to realize the full tax credit at least the way I understand it.....
But I am far from a tax guy... just wanted to stir your thoughts to make sure you had this base covered!

So to clear the mud... is it your understanding that even though they will afford you a 3100.00 tax credit with the limitations that you will still pay at least the amount your AMT comes to... you still cannot benifit because you usually don't have to pay any more except what the AMT demands?

If thats true, I don't see how a deduction will benifit either.. the AMT still predominates? Wouldnt' you still be in the same boat? If so, that removes the financial incentive to get the 2005 instead?

Maybe someone who knows taxes a bit more can clear the mud?

 

So it sounds like you have to pay the AMT and no more, the credit will not help you.
If you paid more than the AMT after deductions, it would have.......

Hope you enjoy your new 05, and yes I'm with you on your thoughts about playing out in the Garage..... my mind would not be on Thanksgiving too much!!!!


but on the other hand... once all the thanksgiving stuff is over... it would be fun to take all the relatives for rides to show it off!!!!....... humm got you thinking eh?

 

If money has any "time value" to you, then the 2005 gets you the $700 in tax savings in a few months (whenever you file), whereas waiting until the 2006 puts any tax benefit (if there is one) out over a year, when you file your 2006 taxes in 2007. In your case, I wouldn't recommend reducing your weekly deductions thinking that you'll get the $3,100 as some here have suggested; if the AMT does negate the tax credit (and I have always heard that it can indeed do so), then you might end up under-withholding and owing a penalty in addition to the taxes!

I'm not triggering the AMT this year because our income is slightly less than last year ... my wife's job changed. So I'm waiting until after January 1. But your situation is much different, so your choice of the car now makes sense.

 

The $2000 deduction is taken before the AGI (adjusted gross income) is calculated, and the AMT is based on the AGI. Therefore, the AMT taxable income is reduced by that $2000 (roughly), which translates to lower AMT.

 

You have to consider AMT for 2006, not 2005. Also, you need to look at the difference between regular tax and AMT. I did not trigger AMT for 2004, but the difference was less than $1500.

 

Yeah, under-withholding is bad. However it is easy to withhold as much as you want up to your whole paycheck, So as long as you were on it, you should be able to catch up at the end of the year. Unless you lost your job or something. Basically this is all more than most people feel it's worth...um, me included, but if you're a "time-value money" guy... Also I don't believe you get a withholding penalty as long as you withhold as much as you owed this year, if that means anything.

This whole topic rings a lot clearer today as my guy just called me up and said they have an '05 in my color in stock right now...Good thing we had the poll to make me decide before the temptation was upon me. Besides, it is a package off.