rebate

Before you get barraged with "do a search, this has been covered dozens of times" responses, here's the skinny on the federal tax credit.

It's an actual $3150 tax credit, just like the $1000 child tax credit. That is, it comes directly off of the amount of tax you have to pay this year, not off your AGI. It gets cut in half on October 1, 2006, and stays at that level for (I think) six months, then gets cut in half again for another six months, then goes away. I may have the durations a bit off; I've qualified for the full credit, and have purged the rest from RAM. To qualify, you must take actual delivery of a dealership-new Prius on or before September 30. If you're subject to the Alternative Minimum Tax, the amount you get back may be less than the $3150; if you've paid less than $3150 in taxes for 2006, you won't get back more than you've paid. These are things you'll have to figure out for yourself.

I don't have a clue about Missouri taxes.

hope this helps

 

Where in Missouri do you live?

 

Don't lose your federal tax credit!!

Just checked with my accountant and the IRS,

THE $3150 FEDERAL TAX CREDIT IS ONLY AVAILABLE AS A CREDIT, THE IRS SAYS THE FEDERAL TAX CREDIT IS NON REFUNDABLE IF YOU DON'T OWE TAXES!!

IN OTHER WORDS IF YOU USUALLY GET A REFUND YOU WON'T GET THE $3150, YOU HAVE TO OWE TAXES. SO LET'S SAY YOU COMPLETE YOUR TAXES AND YOU OWE THEM $1,000, YOU APPLY THE FEDERAL CREDIT AND YOU OWE NOTHING, BUT YOU DON'T GET BACK THE DIFFERENCE OF $2150.

MY ACCOUNTANT SUGGESTED THAT I REDUCE MY WITHHOLDING BY ABOUT $700 PER MONTH TIL THE END OF THE YEAR (5MONTHS) AND I'D BE ASSURED OF OWING THEM OVER $3150 TO GET THE FULL CREDIT

DO THIS NOW OR BE VERY SORRY COME APRIL 2007!!!!!!

 

<div class='quotetop'>QUOTE(mextaco1 @ Aug 22 2006, 04:17 PM) [snapback]307740[/snapback]</div>

You are not correct...

 

<div class='quotetop'>QUOTE(mextaco1 @ Aug 22 2006, 04:17 PM) [snapback]307740[/snapback]</div>

Is the tax credit applied in full the first year or is it spread out over two years? Since you have to own your Prius two years to qualify. thanks.

 

<div class='quotetop'>QUOTE(streyle @ Aug 22 2006, 01:32 PM) [snapback]307755[/snapback]</div>

I'D RATHER OWE MONEY AND BE ASSURED OF USING ALL THE $3,150

<div class='quotetop'>QUOTE(ajs @ Aug 22 2006, 01:38 PM) [snapback]307758[/snapback]</div>

CREDIT APPLIES FOR TAX YEAR 2006

 

<div class='quotetop'>QUOTE(mextaco1 @ Aug 22 2006, 04:17 PM) [snapback]307740[/snapback]</div>

The way that you've worded this is a bit confusing.

The tax credit can offset your federal taxes for the year, up to a maximum of $3150. It makes sense to reduce your withholding so that you are not giving the government an interest-free loan but as long as your tax liability for the year is over $0 and your Prius purchase takes place during the qualifying time period, you can get the tax credit. (Note that this is very simplified and doesn't take into account the AMT.) It does not matter if you pay your taxes during the year via withholding or estimated payments or if you choose to pay them all or in part with your annual return.

Also, as an FYI...using all caps on message boards and in e-mails is considered SHOUTING. If you want to avoid nasty comments, I'd advise you to turn off the caps lock and use your shift key.

 

<div class='quotetop'>QUOTE(ohgreys @ Aug 22 2006, 01:42 PM) [snapback]307766[/snapback]</div>

Sorry for the caps but I thought it might get more notice! My accountant said that if your withholding came out perfectly to the tax liability the $3,150 IS NOT refundable. You can do as you choose, but for me, I'm following my CPA's advice.

Some limitations apply
Taxpayers who pay the alternative minimum tax should realize that they may not be able to enjoy the benefit of the hybrid tax credit.
Plus, "the credit will reduce regular income tax liability but not below zero," said Michael Eisenberg, a certified public accountant and personal financial specialist in Los Angeles, in an e-mail message. That is, this is not a refundable credit.
And, he said, "if you're eligible for multiple tax credits, the hybrid tax credit is taken last, after all other credits [such as] child-care credit, retirement-savings credit. Any tax liability left over after these reductions will be the maximum dollar limit of your hybrid tax credit. If the hybrid tax credit exceeds this maximum dollar limit the excess is not refundable, and is lost forever."

 

<div class='quotetop'>QUOTE(mextaco1 @ Aug 22 2006, 05:17 PM) [snapback]307795[/snapback]</div>

Mextaco, I think you need a new CPA or maybe you didn't understand what he told you. It is correct that the credit isn't refundable. But, there is no way withholding will effect the amount of credit you can claim. The amount of credit you can claim is based on your tax liability not your withholding.

Let's play with some numbers. For example if your tax liability was $4,000, your credit was $3150, and you had $4000 in withholding, you would have a $3150 refund which is because of your withholding in excess of your tax liability after credits.

$4000 tax liability before credits
- 3150 credit
$850 tax liability after credits

$4000 taxes withheld
- 850tax liability after credits
$3150 refund

The credit isn't refundable, but your excess taxes withheld are. This is a poor example because the 2 $4000 amounts are the same. If you have questions, PM me.

 

<div class='quotetop'>QUOTE(mextaco1 @ Aug 22 2006, 04:17 PM) [snapback]307795[/snapback]</div>

Whether or not you have your withholding adjusted does not determine whether or not you can use the credit.

The "refund" in "non-refundable" has nothing to do with whether you get a refund when filing your taxes. That refund comes about if you overpay your taxes, through over-withholding, and in that case you are still entitled to take the credit, which will only make that refund larger. What your CPA recommended will in fact keep you from making a several thousand dollar interest-free loan to the government between now and when you would get a large refund, though, so it sounds like you are doing the right thing even if you are not fully understanding what your CPA is telling you.

http://en.wikipedia.org/wiki/Tax_credit

(Edit: previous poster beat me to it. I had "you need a new CPA" in my post but took it out. )