2005 Tax deduction

yep from what I understand it just lowers your taxable income, that is why the amount returned is not that great.

 

I believe it translates you being in the 13% tax bracket. So on the one hand, you get less of a break, but overall you pay less.

I'll probably see a $700 decrease in my taxes, but I'm in a 35% tax bracket.

 

how do you know what tax braket you are in?

 

I've been doing my own taxes for 10 years...also, I'm a doctor, pretty much guarantees I'll be in the top tax bracket.

 

I meant, how does one figure out their tax bracket

 

Ohh, well it can get complicated. You need to figure out your taxable income which is different than your total income. Taxable is just minus deductions. Then the IRS has tax tables that you look up your tax.

This is a 13 page PDF file from the IRS website.

http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

If you look at the last page(13) it gives the general tax brackets for income.

 

Ohh, I understand that. I just thought there was some magical IRS formula for some magical IRS table.
Thanks!

 

It's good to see the working class driving a Prius but because we fall in the mid to lower tax brackets we won't see the benefits of owning a hybrid until we pay off our car loans.

 

Hey, lower emissions and gas savings are benefits you enjoy right away!

 

Mikemd I surely hope you are an employee, unlike many docs who are self-employed. It is the SE who really should go to a tax pro in order to pay as little as legally possible.

 

Did you NOT know this when you bought the car. Was it really a surpise? Considering how hard it is to get the feds to give back ANY money, you did better than some.

 

Well it's better to get even a small tax deduction than nothing at all. Gift horse...

 

Yes, I am an employee , my uncle is SE, more like an LLP, he's always telling me ways to beat the system, I think he deducts cars, meals, gas...everything.

 

If you consider your own selfish interests, we all would like whopping deductions for whatever we buy. But if you consider the national interest, What possible reason can there be for giving anyone an incentive to buy a car whose demand far exceeds its supply?

The point of an incentive would be to convince people to switch to a cleaner, more efficient technology. But with Toyota selling every Prius it can build months before the parts even reach the assembly plant, no incentive is going to result in additional Priuses on the road.

So it's just a give-away that takes money out of the federal coffers and does no good for the nation or the environment. Buying in '04 I got a $500 reduction in my tax bill. Hey, if they'll give it to me, I'll take it. But it was a pretty pointless thing to do because there were planty of people who would have snapped up my car if I had not bought it. This car does not need incentives for people to buy it. What it needs are a bunch more factories making it.

 

But...it allows the current administration to tout it's conservation credentials. Another thing it may do is give an incentive to consumers to buy American built hybrids, which 1) are lacking in number and 2) lacking in quality.

I'm sure you not surprised that this administration would give a tax break...they seem to believe the way to handle all domestic issues is with a tax break.

 

Don't forget to compare your Sales Tax deduction vs State Income Tax deductions. From what I understand, you won't be able to write off sales tax in '06.

You probably paid a fair amount of tax when you purchased your car, so check it out!

 

I believe you may write off one or the other, but not both.

 

Yes, you shoudl write off whichever is higher. You cannot write off both though. Plus if you live in a state like FLorida, where there is no state tax, it's a freebie. We just bought a house this year, plus all the things to fill it, plus a car, plus all the usual things. Huge deductions for us.

 

There is a change for the 2006 calendar year, instead of a tax incentive there is a tax credit. For the Prius, the credit is the maximum for any of the available hybrids (3150.00). From what I have read, this comes right off the top of what you owe/receive. Here is a link to to another web site that discusses the credit.

http://www.hybridcars.com/tax-deductions-c...ts.html#current