Many angry Prius parents come tax time??

Discussion in 'Gen 2 Prius Main Forum' started by Lyle424, Aug 24, 2006.

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  1. Lyle424

    Lyle424 New Member

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    My Prius is to arrive in a couple weeks, but, in the meantime, I happened to find the actual IRS form 8910 used to calculate the credit. To my great dismay, it looks absolutely clear that I along with many others (particularly those with kids) will get very little if any benefit from this credit. The form states that:

    "Although you may not owe alternative minimum tax (AMT), you must still figure the tentative minimum tax (TMT) to figure your credit."

    The hybrid credit cannot result in your taxes falling below the TMT. Toyota and many people on this forum seem to believe that (quoting Toyota):

    "The benefit of the hybrid vehicle tax credit will also be substantially reduced or eliminated if the individual purchaser is subject to the federal alternative minimum tax (AMT)."

    The tax form clearly states that you will be hit by this even if you are not subject to the tax. We don't come close to needing to pay the AMT, but our TMT is such that we would get absolutely nothing from the credit. If we weren't using an education credit, we could get about $1300. If we had no kids we would get almost the full benefit. I wish I were misreading this, but I cannot see any other interpretation.

    I am now considering trying to get my $500 deposit back (maybe based on Toyota's misleading statement). Has anyone with kids actually received this credit already? Good Luck to the rest of you with this!
     
    #1 Lyle424, Aug 24, 2006
  2. randreed

    randreed Same as it ever was . . .

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    Yes the tax credit is real, but you should CYA - Call Your Accountant!
     
    #2 randreed, Aug 24, 2006
  3. pirateprius

    pirateprius New Member

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    The tax credit would be nice, but it's worth having a Prius even if you don't qualify for the credit in part or whole
     
    #3 pirateprius, Aug 24, 2006
  4. Lyle424

    Lyle424 New Member

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    <div class='quotetop'>QUOTE(Rand Reed @ Aug 24 2006, 09:31 PM) [snapback]309156[/snapback]</div>
    I'm sure it's real -- for a fairly small portion of taxpayers.

    <div class='quotetop'>QUOTE(pirateprius @ Aug 24 2006, 09:48 PM) [snapback]309162[/snapback]</div>
    Yeah, that's the big question for me now. With the tax credit it was a no-brainer. Without the credit, it might be worth my money (and still be good for the environment) to put a new engine in my old clunker.
     
    #4 Lyle424, Aug 24, 2006
  5. tacomel

    tacomel New Member

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    <div class='quotetop'>QUOTE(PushMower @ Aug 24 2006, 09:28 PM) [snapback]309155[/snapback]</div>
    By definition, AMT = TMT - (regular tax) if TMT > (regular tax) or 0 otherwise

    Therefore, it makes no sense to say that you won't pay AMT, but you can't get the full credit because your TMT is too high. It will entirely depend upon your situation whether or not you can use all, some, or none of the credit. Estimating this for me took about a 50 line spreadsheet, and it turns out that we will get to use all but about $1000 of two Prius credits for 2006 assuming all goes according to current estimates.

    I would venture to guess that the credit will be good, at least in part, for most everyone. While it is a good idea to figure this out in advance if that's an important factor in one's purchase, I cannot conclude that the credit will be useless to most individuals because the OP does not qualify for it.
     
    #5 tacomel, Aug 24, 2006
  6. Lyle424

    Lyle424 New Member

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    <div class='quotetop'>QUOTE(Taco Mel @ Aug 24 2006, 09:56 PM) [snapback]309167[/snapback]</div>
    I wish, but unfortunately: HYBRID CREDIT < (regular tax - other tax credits) - TMT.

    So, for example: TMT = 5000, Tax = 7000, AMT = 0, other tax credit = 3000, Hybrid Credit = 0.
     
    #6 Lyle424, Aug 24, 2006
  7. tacomel

    tacomel New Member

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    Some credits are deductable for AMT purposes (hence they are subtracted from TMT) and some are not. The hybrid credit is an example of the latter. I do not have other credits to consider, so my equation is a bit simpler than yours I guess.
     
    #7 tacomel, Aug 24, 2006
  8. Soylent

    Soylent The v isn't a station wagon! It's just big boned

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    So, for us that aren't tax specialists, what does this mean in laymans terms? I don't know anything about AMT and TMT (I assume I don't make enough money for it). Are you saying we're not going to recieve the full credit, but only a portion of it?
     
    #8 Soylent, Aug 25, 2006
  9. efusco

    efusco Moderator Emeritus
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    If you don't make enough for AMT you'll most likely get the full credit.
     
    #9 efusco, Aug 25, 2006
  10. Soylent

    Soylent The v isn't a station wagon! It's just big boned

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    How much do you have to make for the AMT to take effect?
     
    #10 Soylent, Aug 25, 2006
  11. tacomel

    tacomel New Member

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    There is no set number for AMT to "take effect".

    With that said, if you have less than $62550 of income if married, half that if single, then you will NOT be subject to AMT. Guaranteed. You get to subtract that amount right off the top when figuring out if you owe AMT.

    Now this does NOT mean that if you make more than this, you owe AMT. I went through this all before in a previous thread so I am just going to link it instead of rehashing it:

    http://priuschat.com/index.php?showtopic=22736

    Start reading with my post on July 31, 2006.
     
    #11 tacomel, Aug 25, 2006
  12. Soylent

    Soylent The v isn't a station wagon! It's just big boned

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    <div class='quotetop'>QUOTE(Taco Mel @ Aug 25 2006, 10:43 AM) [snapback]309263[/snapback]</div>
    Good post, thanks for the info.
     
    #12 Soylent, Aug 25, 2006
  13. bhaynnes

    bhaynnes Member

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    <div class='quotetop'>QUOTE(Soylent @ Aug 25 2006, 07:56 AM) [snapback]309271[/snapback]</div>
    I carefully read this entire thread. Now I have a headache :lol:
     
    #13 bhaynnes, Aug 25, 2006
  14. Rancid13

    Rancid13 Cool Chick with a Black Prius

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    #14 Rancid13, Aug 25, 2006
  15. mikepaul

    mikepaul Senior Member

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    Maybe I'm too trusting, but doesn't most tax software alert you if the AMT would be applicable? Small investment for peace of mind...
     
    #15 mikepaul, Aug 25, 2006
  16. DaveinOlyWA

    DaveinOlyWA 3rd Time was Solariffic!!

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    i find it hard to believe that anyone would ONLY buy the Prius for the tax credit. especially when the amount of the MAXIMUM tax credit could easily be realized in a few years
     
    #16 DaveinOlyWA, Aug 25, 2006
  17. Jim1eye

    Jim1eye Shaklee Ind Distributor

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    <div class='quotetop'>QUOTE(PushMower @ Aug 24 2006, 10:28 PM) [snapback]309155[/snapback]</div>
    So 2/3 of the way through the year, you used 2005 tax forms to figure out your 2006 tax. You must have done a lot of guesstimating.

    I'm not sure what statement by Toyota you find to be misleading. The one you cited seems very accurate.
     
    #17 Jim1eye, Aug 25, 2006
  18. M. Oiseau

    M. Oiseau 6sigma this

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    This is as clear as mud to me. I'm going to go for it, though.

    "Shake and bake!" - Ricky Bobby
     
    #18 M. Oiseau, Aug 25, 2006
  19. justsoup

    justsoup New Member

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    The idea of any type of tax relief was just an added bonus in my thought process in going to the Prius. I'll sort through it later, probably in April ;)
     
    #19 justsoup, Aug 25, 2006
  20. JackDodge

    JackDodge Gold Member

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    <div class='quotetop'>QUOTE(Rand Reed @ Aug 24 2006, 10:31 PM) [snapback]309156[/snapback]</div>
    That's for darned sure. If you're in AMT territory, you definitely need an accountant anyway. Get one at reputable CPA firm.
     
    #20 JackDodge, Aug 25, 2006
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