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Question on 2006 Tax Credit

Discussion in 'Gen 2 Prius Main Forum' started by timg, Oct 11, 2005.

  1. timg

    timg Junior Member

    Joined:
    Sep 6, 2005
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    Location:
    Rochester, NY
    Vehicle:
    2017 Prius
    Model:
    Three
    I just ran some numbers through turbotax as my dealer will have a 2005 available for me either this week or early next week (assuming I like the color of course).

    So anyway, I went through and redid my taxes as if I had bought the car last year. Turns out I got all the tax money I paid back after filling out form 8834 so I would have essentially paid no taxes last year. Now I read on here that a deduction of x would give you $600 off your taxes, etc. The amount I got back (not including what I overpaid/my existing refund) after filling out the forms was around $1500.

    Did I make a mistake somewhere or does this sound correct?

    If this is correct and the same rules carried over from 2004 to 2005 then would there really be much point in waiting for a 2006? I don't find the backup camera all that exciting, I'm not interested in the leather and I'm assuming I'll have the car for at least 5-6 years so resale value isn't a major concern.

    Any thoughts?


    - Tim
     
    #1 timg, Oct 11, 2005
  2. endoildependency

    endoildependency New Member

    Joined:
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    Location:
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    $1,500 sounds like too much. I got $600.

    For 2004-05 the tax break is a $2,000 DEDUCTION from your income. If you're in the 28% tax bracket, you should actually realize less than a third of that.

    The new '06 break is a straight-out CREDIT against your tax balance, AFTER all your other deductions have been subtracted and your tax calculated. It's almost a "rebate". but not quite.

    The CREDIT doesn't depend on your tax bracket. It varies by hybrid car based on a formula featuring MPG. For the Prius it's estimated at a little over $3k. I saw $3,150 quoted.

    I'm not a tax accountant. :huh:
     
    #2 endoildependency, Oct 11, 2005
  3. endoildependency

    endoildependency New Member

    Joined:
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    Should have had this handy last post, but had to look it up.

    see hybridcars.com. keep clicking on "legislation".
     
    #3 endoildependency, Oct 11, 2005
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