What IRS forms needed for the 2006 Credit

As far as changing the rebate - that would be difficult. IIRC it is based on the mileage difference of the hybrid and a standard car. If you change the hybrid MPG then you would also have to change the standard's MPG. This might change the ammount slightly but if both sides of the equation are reduced then the net effect would hopefully be about the same.

 

Aha, excellent point!

 

Yes, good point, as the differences are identified as percentages, not actual mpgs. But there are four tiers of percentages, and if the EPA were to make their planned revision of estimates retroactive, and if as a resulte the percentage difference becomes less, the credit can be reduced greater than the percentage of the difference, since it might fall under the next lower tier.

There is a $400 credit difference between each tier, but each tier is seperated by only 25%.

At least 175% but less than 200% = $1,200
At least 200% but less than 225% = $1,600
At least 225% but less than 250% = $2,000
At least 250% ............................... = $2,400 maximum fuel economy credit

Not assuming that anyone doesn't already know this information, but since someone questioned whether the credits had anything to do with fuel economy at all, thinking they only had to do with hybrid technology, this should help explain the concern I have about a revision in the EPA estimate affecting the credit, if such revisions are deemed retroactive due to the number of consumer complaints logged about the Prius not meeting the estimates.

Even though the maximum credit is only $2,400, this fuel economy credit is added to the conservation credit (determined separately) to arrive at the total credit, which has been widely estimated to be $3,150 for the Prius under the current EPA mileage estimates for 2002 and 2006.

The percentage differences are the increase that 2006 presented over similar sized models in 2002.

 

It still seems too much of a complication for the EPA to make figures retroactive.

1. They'd have to test both the hybrids and the equivalent conventional cars to establish the percentages. This is a lot of work.

2. The IRS would have to agree to all the paperwork, and the retroactive re-filing of adjusted tax returns if the EPA's retroactive changes were to occur after April 15.

I think it will be six months before the EPA even figures out how to change the testing procedure...

 

<div class='quotetop'>QUOTE(Rick Auricchio @ Dec 31 2006, 09:26 PM) [snapback]369149[/snapback]</div>

Can someone summarize the tax implications for me? I purchased in late October 2006 (a 2007) model. My understanding is that some form of tax credit was available until the model sold 60,000 which happened earlier in 2006 for the Prius. So my understanding is that I do not qualify for anything.

 

Actually, the credit continues past the 60K point, but it drops in half, then half again each quarter after the 60K is reached.

I don't know, however, if it applies to the 2007 model year vehicles.

 

<div class='quotetop'>QUOTE(Cam @ Jan 1 2007, 01:24 AM) [snapback]369172[/snapback]</div>

You should qualify for a $1575 tax credit; the IRS lists this credit as being available for 2007 Priuses purchased from 10/1/06 Through 3/31/07. See http://www.irs.gov/newsroom/article/0,,id=165649,00.html

 

<div class='quotetop'>QUOTE(Walker1 @ Jan 8 2007, 08:52 AM) [snapback]372412[/snapback]</div>

On the IRS website form 8910 is a 2005 form not a 2006 form. It has been pointed out here that the IRS will not have the 2006 form until Feb. If you have a 2006 form please post the link.
Thanks

 

Several people have asked about how the EPA revision in their gas mileage testing will affect their tax credit. We're talking about the tax credit for 2006.

The EPA revision won't go into effect until the 2008 model year, so it cannot in any way affect tax credits for 2006 for purhases of the 2006 or 2007 models.

 

<div class='quotetop'>QUOTE(mootsman @ Jan 8 2007, 09:31 AM) [snapback]372433[/snapback]</div>

As Walker1 mentioned, this should be the correct form. I know it says 2005 on the top, but then it asks you the date in 2006 that you put it into service. Obviously it must be for 2006.

It's interesting that you can still claim the credit even if the vehicle's certification was later withdrawn, as long as it was certified at the time you bought it.

 

Yes, and my word of caution to all is to note the instruction to line 16 of form 8910 which tells you that you HAVE TO COMPLETE AND ATTACH the AMT form as well.

Why this form 8910 says 2005 at the top but 2006 in the form I don't know, but it is incredibly annoying.

 

http://priuschat.com/index.php?showtopic=28053&hl=

I posted this reply after talking to an IRS rep. To summarize: One CAN NOT use a 2005 dated form with a 2006 return. If you do, the IRS may disallow your credit and send a penalty letter demanding interest and penalties as well. You'll be lucky to get this straightened out in 6 months.

Wait at least another week to download the 2006 form. If you read the form 8910 you will notice that you also need to calculate the alternative minimum tax (AMT) on form 6251. You can't file your 2006 return for another week anyway so sit back, relax, and save yourself a boatload of aggravation.

Please give the posts here by the accountants the same attention and respect that we give the posts offered by the more technically inclined. I don't want to see any posts this fall complaining "the IRS disallowed my credit".

 

Ugh, the IRS is as annoying as they are an overly complicated mess of legal tax bureaus to trap the taxpayers.

Anyway, I usually do my taxes online via TurboTax....do you think these credits will be done automatically when we file them online? I know I can't do my taxes until I get my W-2 forms, but I would think that we could possibly file the vehicle credit online too as well. I will have to check out the TurboTax website soon to find out. Even if the credit reduces my tax liability, at least the federal tax that was withheld during 2006 would be refunded to me since I believe the tax credit would apply against the total tax liability.

Now since I live in Michigan, I have to also file state taxes, but I doubt that there is any credit system in place for hybrids. Either way, I hope to get a decent amount back this year.

 

<div class='quotetop'>QUOTE(JimN @ Jan 8 2007, 08:50 PM) [snapback]372821[/snapback]</div>

Point noted. Of course, by the time I get around to doing my 2006 taxes, it'll be well into 2007 anyway.

 

<div class='quotetop'>QUOTE(Hopeful Future Prius Owner @ Jan 8 2007, 09:15 PM) [snapback]372837[/snapback]</div>

I don't use the TurboTax program or their web site so I don't KNOW. However, this credit is taken on line 55c of form 1040 where you have to write in the form number. I think the best you can expect is that the forms 8910 and 6251 are bundled in the product or available on the site.

Yes, credits directly offset the tax liability so any overpayment can be refunded. Excess credits can not be carried forward or backward. Tax trivia: For someone to NOT receive the full benefit of the credit their taxable income would have to be less than what was paid for the car.