So, in short I'm looking at buying a Prius Prime but the sticker price is throwing me off a bit. MSRP on an advanced is $34,303 I know you can qualify for a $4,500 tax rebate but I don't really understand how that works. From other threads, it doesn't seem as though dealers are coming off the MSRP very much, ideally I wouldn't be paying more than 30k including taxes. Also, I looked at leasing, but I was told at the dealership a lease was going to be over $1000 for 24 months or over $800 for 36 months. Does that seem right?
Before I start, talk to a tax advisor for your specific situation. In general, (and assuming you do qualify for the full $4,500 amount), you will pay the negotiated price of the Prime at the time of purchase and receive the $4,500 tax credit off your next year's tax submission. What this means is that you do not get $4,500 off the sticker price at purchase. You have to cough up the amount for the car as if there was no credit. When you file your taxes next year, if you owe more than $4,500 in taxes, $4,500 will be deducted and you just pay the difference (so a smaller income tax amount next year). If you owe less than $4,500, then you will only get credit for that amount and you do not get a tax refund on the difference. For leasing, it's a bit more complicated but sometimes the leasing company will factor in the credit to the monthly lease amount to lower your monthly payment - this should amount to almost $4,500 (expect rounding errors).
So, if I qualify for the amount and I DON'T owe any taxes that means I get nothing? Sorry, I may be asking stupid questions but this is kind of foreign to me.
It's not a stupid question. It's important that you understand this. So yes, ask away! But you're asking a foreigner about US income taxes lol (I'm in Canada) but my understanding is that if you don't owe any taxes next year when you file for this tax credit, you get nothing. (because it's a tax credit not a tax rebate) Again, I would check with your tax consultant as I will place a disclaimer on my statement above as "true to the best of my knowledge given that I am not a United States resident and I'm only passing on information that I have read on this forum from other members"
Thank you! They make this stuff difficult I appreciate you responding. And I will check with someone, I think my dad has a tax consultant or at least knows someone who is.
I know. I don't know why. In Canada, it's super simple - it's a monetary rebate at point-of-sale. So it's deducted like a discount when you buy the car so you don't have to cough up the money first and then receive it the following year (the dealer claims the rebates from the government when *they* file their business tax)
If you are willing to deal with NY/NJ area dealers you will get $5000 cash back incentive on 2017 model PRIME. That's $5000 off from MSRP. It is good till 6/4, but it may continue until they deplete all the 2017 stock. This is regional offer which is not available in other area, and cash back amount varies depending on region. There are quite few people in PriusChat who have travelled across the country to take an advantage of this regional offer. I'm sure they will chime in with advice and recommendations.
welcome! the federal tax credit is really very simple. if you pay federal taxes, then you will get up to $4,500. dollars back from the irs depending on how much you pay. all you have to do is look at last years tax returns to see how much you paid, and if this year is similar, you have a good idea. if you are not capable of doing that, you either need total more interest in your tax returns, or talk to the person who does. as for your other questions, you need to call around to as many dealers as possible, or email them and ask for quotes. you can find their available inventory on line,. i'm not clear what you are saying about leasing. it is usually a downpayment and a monthly payment, with a limited amount of miles you can drive per year without a penalty. all the best!
Just to make sure this is clear, the $4500 tax credit, stated another way, returns to you the first $4500 you pay in federal tax, at the end of the tax year that you made the purchase. So if my salary was $125,000 for the year, and I paid $14,000 in federal tax through payroll deduction throughout the year, and after doing my taxes I owe an additional $1,000...I then factor in the $4500 tax credit for buying the Prime, so instead of owing $1,000, I now get a refund of $3,500. I am in Greensboro, NC, and back in April I negotiated an awesome deal with Jim Coleman Toyota in Bethesda Maryland. I sent them detailed pictures of my trade along with the payoff and VIN number. We negotiated via texting and phone....they gave me roughly $3000 off the sticker, and a $3000 Toyota rebate. I took a day off from work, drove up there (6.5 hours one way), and made the deal as negotiated (no tricks) and then drove the Prime back home. I think I was at the dealership about 1.5 hours before getting back on the road to drive home. Call them and tell them Steve Bowie sent you! While the dealers in NY do have a $5000 rebate, I found that they will not come off the sticker very much (in my experience). Plus, Bethesda was a much shorter drive. Good luck!
Thank you for the info! My dad is going with me to buy the car and I don’t think he’ll be willing to drive/fly to New Jersey haha
Unfortunately I didn’t work last year, and this year I’ll start teaching so my salary is going to be completely different from years past. I think I saw somewhere though that the money could be put into an ira or Roth IRA. And what I was saying about leasing, I had asked a dealership for a quote essentially. Their quote was $1000/mo to lease the car, more than twice what my monthly payment would be!
That’s such a good deal! I’m totally jealous. I don’t have a trade in (my 07 Prius isn’t worth much) but I’m hoping I can make up for it in other ways. That dealership is about 7.5 hours away, I might be hard pressed to get my dad to go haha. Although, we will be in the DC area next weekend maybe I can convince him then. Thank you for the info!
yes, that is incorrect on the lease. you need another dealer or fence person. most dealer websites have leasing info. take your new salary and look at the new 2018 tax reform tables. since you are only working a partial year, it will take some detailed figuring to see about how much federal tax you will pay.
Well, 7.5 hours is only an hour more than the trip we made—and it’s well worth the huge savings. And you are planning to be in DC? This is a no brainer LOL. Send them an email or call—I think that they still have 5 Blue Advanced (a must IMO) 2017s on the lot. Let them know when you will be there and with a $500 deposit they will hold the car.
I have a few questions so we can better help you: 1. Are you single or married? If married, you can use household income to qualify. If you're single and will have less than half of your yearly salary, you probably won't qualify for the whole $4502 credit. I used TaxAct's 2018 estimates for the following, it may or may not be right, but it should be close: 2018 income 2018 tax $53,000 $4660 $40,000 $2870 $35,000 $2270 $30,000 $1670 $25,000 $1070 $20,000 $500 Since you're going to DC with your dad, look for a 2017 Prime in the DC area. Right now they have $3000 cash plus $750 college grad rebate. If you stretch out to NJ/NY it's $5000 cash plus $750 grad rebate. If your dad qualifies for the whole rebate, ask if he could buy it for you and then gift it to you. Check with your state's law on car gifting first. 2. What is the terms of the lease, how much down, how many miles annually? 3. Do you really need the Advanced or will the Premium trim do?
I’m single, and I’d be making ~40k. I saw the 17s in DC and they sound like a great deal, can’t argue 3k off plus your tax credit and the college grad rebate. My dad is kind of weird about buying a 17 though because He thinks I’ll lose more money as far as depreciation goes. My dad is co-signing, so I don’t know if/how that changes the credit. 2. Lease terms 24 months, 1k down, 12k miles. More you put down, less the lease is, but it still seems high to me when I can lease a ford energi for ~300 a month. 3. I don’t NEED the advanced, but I do really like the safety features in the advanced and it’s not an option to put on the premium ): So I could settle for a premium, but I’d prefer the advanced.
The Your Dad is correct about the depreciation. But with $6k off the sticker, and a tax credit coming, the depreciation is mitigated. But here’s the thing, for me, the depreciation does not matter because I am ALL IN with keeping the Prime until it literally dies. Hopefully that’s over 12 years and 250k miles. Depreciation only really matters if you plan to trade in the next few years or so.
I tried telling him I wanted to keep the car for 10 years at least! He thinks I won’t stick to that, but I love to prove people wrong but seriously, the depreciation won’t really matter with as much as I would get off from sticker price.
Dad’s are normally correct—and they always have their daughter’s best interest at heart! I’m 54 years old—when I was in my 20s, there is no way I would keep a car that long LOL. But if you are that type who can do it, and you will have to convince your Dad LOL, then go for the 2017–and get the Advanced.
