I just had my taxes done by a friend and he gave me some bad news that I would only be recieving ~ $2500 instead of the $3150 I had been expecting. The reason is because I had only $2500 federal withheld on my W2. Well, not being so happy to hear that I would be getting a penalized tax credit because I didn't make enough money to pay enough taxes to cover the credit, I looked into it and filled out all the forms myself, and it seems to add up like that. I saw a mention of being able to make a claim on next years taxes for credit's I was not able to put to full use, but I really don't want to wait till next year to claim that $600 if I dont have too. So anyways my question would be this, since I only paid ~ $2500 is taxes is this what I really should expect or should I have someone more creative do my taxes this year? And to follow that up, if I only get the $2500 this year, will the rest of the $3150 credit carry over to next year's claim?
<div class='quotetop'>QUOTE(ali @ Feb 19 2007, 07:39 PM) [snapback]393092[/snapback]</div> There are a few credits that carry over year to year, but this one is not one of them. If you only paid in $2500, the most you could get back is $2500. But that's still a good deal, because you paid no income taxes. If you earn too much and are subject to the "Alternative Minimum Tax", the rules disallow all or a portion of it, even though you paid in more than the credit. That would be worse!
My understanding was it is your tax liability, not the amount you paid in. In order to receive the $3150 you would need a tax liability of that amount or more. If you have you witholding set lower than your liability, you would owe the federal government money at tax time. The credit would offset what you owe. In other words say I have a tax liability of $4000 for my income. I have only paid in $1000. I would owe the government $3000 but I have a credit of $3150 for the hybrid. So I would actually receive a refund of $150. Of course there are other variables such as AMT to consider but this is just a simplified example.
Thanks for the info guys, not exactly what I wanted to hear, but wasn't expecting much more. I really hate the tax rules on this, one thing to screw over the people making a lot of money, but feels even worse when you dont get the full credit cause you didn't earn enough.
<div class='quotetop'>QUOTE(ali @ Feb 20 2007, 09:24 PM) [snapback]393635[/snapback]</div> It really doesn't matter how much you paid in. What matters is the amount of tax you are liable for. If that is equal to or greater than $3150, you should get the full $3150 credit. You say you only paid in $2500...would that amount normally give you a refund or would you have to pay in more at tax time. If the answer is you would have to pay in more then you will get what ever the "more" + $2500 equals. If the answer is you get a refund, then your hybrid credit will be $2500-what ever the refund would have been. If you do your own taxes, you might want to run them through turbo tax or tax cut first. Both are free until you decide to print them or submit them electronically.
I'm having a real hard time feeling sorry for someone who doesn't get the full credit because the credit was greater than their income tax liability and as a result doesn't owe any income tax.
<div class='quotetop'>QUOTE(Marlin @ Feb 21 2007, 11:12 AM) [snapback]393899[/snapback]</div> What I wonder is how if you only owe $2500 you can afford car payments. Owing $2500 would roughly be making less than 20k a year. 20,000 Tax rate (single): $755 plus 15% of amount over 7550 $755+1867 (i.e., 15% of 12450)=2622 tax liability
<div class='quotetop'>QUOTE(MegansPrius @ Feb 21 2007, 10:54 AM) [snapback]393923[/snapback]</div> Meganprius, that $20,000 is taxable income not total income. Taxable income is AGI minus personal exemptions and standard or itemized deductions. The OP could be receiving non-taxable income that isn't included in taxable income. They could have paid cash for the Prius becasue they have investments or inherited money. IMHO, judging someone's financial picture from taxable income can easily lead to some inaccurate assumptions.
<div class='quotetop'>QUOTE(cmympg @ Mar 1 2007, 07:31 AM) [snapback]398355[/snapback]</div> How did I miss this thread? :mellow: Sounds like low taxable income to me. Al Capone ran half of Chicago and claimed he had no income.
Well I for one had an AMT kick in and it reduced my credit down to $700 from the max 3150. It's a sale pitch that doesn't apply in all cases thanks to the AMT. Buyer beware -there's always a catch when the gov't involved. Now that the demand has softened one can possibly see incentives on the horizon. Better to shop smart and deal with the dealers and makers. Still great to see my gas bill be reduced to about a third what I had before, even my accountant took note.
<div class='quotetop'>QUOTE(nick0102 @ Mar 11 2007, 04:08 AM) [snapback]403708[/snapback]</div> Welcome to the site. If you look up the sales threads you will find that demand hasn't softened. Now that gas prices are increasing I think you'll see dealer asking prices creep back up.
<div class='quotetop'>QUOTE(JimN @ Mar 11 2007, 10:42 PM) [snapback]404011[/snapback]</div> Whew!! bought mine just in time. Gas had gone down , also the end of the month and 7:30 at nite. All in all they were ready to deal. Now when I see the gas prices go up I feel vindicated. LOL
