Tax Credit and the AMT

If you're getting hit with the AMT that means that your overall tax burden is extremely low anyways. So boo freaking hoo.....

 

<div class='quotetop'>QUOTE(sl7vk @ Aug 26 2006, 10:24 AM) [snapback]309782[/snapback]</div>

You are SO wrong I can't even begin to tell. I just have the satisfaction of knowing that YOU will be hit by the AMT someday and then you'll realize what a travesty it is. Since it is not indexed to inflation, you're only a small ways from being hit by it, no matter how little you think you make.

 

<div class='quotetop'>QUOTE(jbarnhart @ Aug 26 2006, 02:14 PM) [snapback]309833[/snapback]</div>

Sl7vk's response was unfortunate since the OP was merely asking for information - not a value judgment.

I do agree that sooner or later, barring some change, most people, who thought they were world's away from being affected by the ATM, will be.

 

Then please do explain. I make six figures and won't be hit with the AMT.... Granted I don't have 9 kids and 50 other types of deduction many people have.... I think people are a bit averse to paying their fair share anyways.

 

<div class='quotetop'>QUOTE(mootsman @ Aug 26 2006, 11:28 AM) [snapback]309770[/snapback]</div>

But the way the code is written you could easily NOT be liable for the AMT but still not get the credit. Toyota should correct his misconception by changing the wording on their website. I am not liable for the AMT. I will not get the credit. I am guessing that in your case you have little to worry about because you likely have no kids under 17. It is additional tax credits than can affect your Prius credit, regardless of your AMT status. Enjoy the Prius and the toys!

 

<div class='quotetop'>QUOTE(PushMower @ Aug 28 2006, 12:42 PM) [snapback]310584[/snapback]</div>

I am not a tax lawyer, but I think that if the AMT stops you from claiming all credits, then you ARE, by definition, liable for the AMT (i.e. I think that's the meaning of "liable for the AMT"). Basically, you can't use credits to take your tax below the level of the AMT for you. Now, we can argue (and many have) that the AMT is outdated, but I think that all of the warnings that people have made on this site (i.e. "There's a $3K tax credit, assuming you're not going to be subject to the AMT") are reasonable descriptions of the potential pitfalls.

That said, if you haven't yet, you might want to consider talking to an accountant, PushMower. They might be able to figure out things with the tax code that you didn't.

 

<div class='quotetop'>QUOTE(Betelgeuse @ Aug 28 2006, 12:07 PM) [snapback]310599[/snapback]</div>

I am not a lawyer nor an accountant. I have never been hit with AMT but I have been inelgible for certain credits because of my income. Ya know that $1,000 credit you get for each kid? I am no millionaire, but my wife and I make enough that we only get about $100 of that. Even though you might not be subject to AMT, you can lose portions or all of certain kinds of tax credits as your income goes up.

However... and I am guessing here... the hybrid credit may not be one of the credits subject to income limits (outside of AMT). I read in a IRS publication that leasing companies can take the credit when they Lease a hybrid to a customer. (Anyone leasing a Prius or other Hybrid should be aware they are not eligible for the credit if the lessor is taking it.) I would guess most leasing companies have much larger revenues than I.

 

The hybrid credit isn't subject to income limits, at least not directly. There's nothing that says the rich can't take the full credit... however, if the taxes you have to pay prior to the hybrid credit(ie taxes - other credits)are too low, you'll either be hit by the TMT or hit 0 before you take all of the credit... So it is possible, given other credits and deductions, to not hit AMT and still not be able to take any of the hybrid credit. Following all the other current threads on this subject, this is the situation PushMower is in.

 

<div class='quotetop'>QUOTE(Curtis SAC @ Aug 28 2006, 01:59 PM) [snapback]310621[/snapback]</div>

Same thing goes for me...my child credit last year was reduced substantially. Some googling tells me that in 2006 the child tax credit begins to phase out when AGI reaches $110k for married, filing jointly filers. It is reduced by $50 for each $1000 you are over the $110k.

 

<div class='quotetop'>QUOTE(PushMower @ Aug 28 2006, 11:42 AM) [snapback]310584[/snapback]</div>

I have posted before, and will indicate again, that AMT is by definition the difference between TMT and regular tax. The form you referenced has you write in the regular tax, subtract credits that aren't allowable under AMT rules, and then subtract the TMT. If the result is positive (meaning that regular tax - credits - TMT > 0) then you get some or all of the credit. Rearrange the variables a bit does mathematically give a result consistent with Toyota's statement, and everywhere else on the web where you read about the tax credit. I would guess that they chose their wording because it's easier to write that one-liner instead of a detailed explanation (just see the length of the threads around here on the topic).

For a comprehensive answer, see your accountant, or run the numbers yourself as it seems you have done. If it turns out that your personal tax situation means that you cannot claim the credit, and you really do want your deposit back, there are likely a great many others who would love to take advantage of a great vehicle, with a potential tax credit as gravy. For any who are downwardly adjusting withholding in anticipation of the credit, I would encourage figuring it out and/or consulting an accountant before doing so.