New '05s are eligable for the tax credit if you are. Take a look at this the Prius FAQ for a good expaination of this complicated issue. http://en.wikibooks.org/wiki/Toyota_Prius_FAQ
Our friend is a CPA and I asked her about those who may be taxed using the AMT calculations. She was not sure but she thinks that the energy credit could be treated the same as other credits when calculating the final taxes owed. 1. calculate your taxes using regular deductions - home mortgage, etc. 2. calculate using the AMT deduction but remove home mortgage, real estate taxes etc. 3. pay the higher of the two. 4. then apply the credit - 3,150 for the Prius. Again, she was not sure, but this is how other allowable credits are used.
In a word, "wrong". The $3150 credit will NOT reduce your taxes below your AMT. (I can cite numerous references if you wish, including the text of the law.)
Thanks for your replies. We're confused by the AMT aspect too. if we don't get the credit it may be worth buying a used 05.
