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2006 Tax Credit Strategy

Discussion in 'Gen 2 Prius Main Forum' started by Kiloran, Oct 28, 2005.

  1. Kiloran

    Kiloran New Member

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    You really don't have to wait till after April 15, 2007 to get the estimated $3200 tax credit.

    Knowing in advance that the government will be crediting your taxes by ~$3200, you can reduce your withholding by ~$800 per quarter during 2006.

    If you are an employee, you should be able to arrange this with your HR person.
    (Make sure they restore it in 2007!)

    If you are self employeed, you can reduce your quarterly estimated taxes by ~$800.

    Make sure of your situation relative to Alternate Minimum Tax to make sure you will qualify for the credit.
    Also, consider talking to a financial/tax analyst before taking this kind of step.
    B)
    (Repost of a lost thread.)
     
    #1 Kiloran, Oct 28, 2005
  2. Kiloran

    Kiloran New Member

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    #2 Kiloran, Nov 17, 2005
  3. driverx

    driverx New Member

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    Do I lose the tax credit, if I get the car on Jan 1 06 and decided to sell it in Jan 07?
    6000lb SUV tax rule used to have the 5 year requirement.
     
    #3 driverx, Dec 5, 2005
  4. Kiloran

    Kiloran New Member

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    I believe you do not but I am not a tax professional.
    ne.DOE.gov - Energy Policy Act of 2005
    Be sure to consult with a tax professional before attempting something like this.
     
    #4 Kiloran, Dec 5, 2005
  5. maggieddd

    maggieddd Senior Member

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    really, really dumb question. How do I know if I need to pay Alternate Minimum Tax?
     
    #5 maggieddd, Dec 5, 2005
  6. Kiloran

    Kiloran New Member

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    That is NOT a dumb question! (really really)
    Check out the Alternate Minimum Tax section in the FAQ section in the FAQ.

    H&R block has an online AMT estimator available:
    H&R Block 2005 AMT Estimator
    B)
     
    #6 Kiloran, Dec 5, 2005
  7. maggieddd

    maggieddd Senior Member

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    #7 maggieddd, Dec 5, 2005
  8. Kiloran

    Kiloran New Member

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    You're welcome.
    If your situation has not changed significantly since last year and you used a tax program like TaxCut or TurboTax, you should be able to lookup last year's AMT from your saved tax return file and use that as an estimate of your current year's AMT.
    B)
     
    #8 Kiloran, Dec 5, 2005
  9. roach52osu

    roach52osu New Member

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    Thanks for the AMT estimator link, I was pretty sure I would not have to deal with the AMT but it was nice to check. (dont want to find out after passing on a Prii that I wont get the credit anyway :p

    Thanks,
     
    #9 roach52osu, Dec 5, 2005
  10. huh

    huh New Member

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    I'm planning to delivery this week on a 2006 (-$500 MSRP) vs waiting until Jan/Feb(whenever one of my 3 orders actually comes in...). The 50k HOV evaluation has frighten some of us CA folks. ;) I was playing with the H and R tool and realized that for this year, I'll probably be taking the Standard deduction vs itemizing.

    Silly deduction question:

    Will the $2000 hybrid deduction get added on top of the Standard deduction or will I be forfeiting it if I don't itemize?

    Thanks
     
    #10 huh, Dec 5, 2005
  11. Kiloran

    Kiloran New Member

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    I'm not certain but I would be surprised if you could take the standard deduction and the $2000 hybrid vehicle deduction.
    I think you'll most likely need to itemize to benefit from this deduction.

    If you use a tax program, it will almost certainly compare standard vs. itemized deduction strategy and offer the most advantageous for your situation.
     
    #11 Kiloran, Dec 5, 2005
  12. chicobob

    chicobob New Member

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    Go Here:

    http://www.toyota.com/prius/tax.html

    In the IRS News Release if you click on October 14, 2004 it says the following:

    The one-time deduction must be taken in the year the vehicle is originally used. The
    taxpayer must be the original owner. Individuals take this benefit as an adjustment to income on Form 1040. They do not have to itemize deductions on their tax returns to claim it.

    The link shown also lets you click on two links for the Toyota Certification letter and the IRS Acknowledgement Letter you will need.

    I'm assuming Toyota will write a letter to the IRS for the 2006 owners who have purchased in 2005.
     
    #12 chicobob, Dec 6, 2005
  13. Kiloran

    Kiloran New Member

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    Great stuff!
    I have added the link and most of the content to the Toyota_Prius_FAQ.
     
    #13 Kiloran, Dec 6, 2005
  14. driverx

    driverx New Member

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    Duhhhh... My teacher told me that there is no such thing as a dumb question.
    I am not sure what is so dumb about my question. :angry: Frankly, I don't understand your posting about paying AMT??? What are you talking about?
     
    #14 driverx, Dec 6, 2005
  15. jeneric

    jeneric New Member

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    She was saying her question was dumb, not yours.

    The answer to your question is that you probably don't lose the tax credit if you sell the car the next day. But it's only a "probably" as far as I know.
     
    #15 jeneric, Dec 6, 2005
  16. Kiloran

    Kiloran New Member

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    Right. I believe she was referring to her own question.

    AMT is "Alternate Minimum Tax".
     
    #16 Kiloran, Dec 6, 2005
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