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Discussion in 'Gen 2 Prius Main Forum' started by aubergaz, Apr 25, 2006.

  1. aubergaz

    aubergaz New Member

    Joined:
    Apr 25, 2006
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    Location:
    Phoenix, Arizona
    Vehicle:
    2006 Prius
    I'm a bit premature. I've ordered, but have not received my car as yet. It is due within the next week or so. Pkg 7 in Magnetic Grey. :)

    I was curious about info on the tax credit.

    My sales person indicated that the $3150 would either apply to reducing my tax liability if I owed, and would simply come as an additional refund if I had withheld too much.

    I saw commentary on another site indicating that it can only '0' you out, not become a refund in and of itself. This didn't make much sense. Are they saying when it is all said you done you better owe $3150 or you don't benefit?

    If anyone has a clear understanding of the program. Please let me know.

    Thank you.
     
    #1 aubergaz, Apr 25, 2006
  2. the fish

    the fish Member

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    It is not a refundable credit, like the child tax credit. So your refund cannot be more than the tax you paid in.

    There are other limitation issues like AMT, but folks with a tax liability of $3,150 are probably within the AMT income exception.
     
    #2 the fish, Apr 25, 2006
  3. highroute

    highroute New Member

    Joined:
    Apr 9, 2006
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    <div class='quotetop'>QUOTE(aubergaz @ Apr 25 2006, 06:10 PM) [snapback]245229[/snapback]</div>
    Think of it like this, though this is a simplification: First, you calculate your tax. Then you subtract the tax credit for buying the new qualifying hybrid. In the case of the Prius, you subtract $3150. The result at this point must not be less than zero, so if you have a negative number you must change it to zero. Finally, you subtract your tax withholding and any estimated taxes you paid in. If the result is positive, you owe money with your return, and if negative, that's your refund.

    There are federal income tax credits that can result in a negative number at that one point there, but this isn't one of them.
     
    #3 highroute, Apr 25, 2006
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