tax credit

You're essentially being given $3150 cash if you satisfy all the "ifs". The first "if" is satisfied - you got the car before 1 October. If you paid more than $3150 in income tax, and if you aren't subject to the alternative minimum tax, if the car was new from a dealership, and if you keep the car "long enough" (don't know what that means, just don't sell it this year or next for sure), then you get the $3150 credit. It comes off of the money you paid in for federal income tax, and is not a percentage, just like the child tax credit.

 

<div class='quotetop'>QUOTE(seasideman @ Sep 11 2006, 10:28 AM) [snapback]317805[/snapback]</div>

You will be entitled to enter $3150 on IRS Form 8910. On that form's lines 3 and 5, if the 2006 form is numbered like the 2005 form. If that amount survives the questions asked of you further down on the form, such as whether you are subject to the Alternative Minimum Tax, you'll get to carry that number over to Form 1040, where it will be added to line 55, again if the 2006 form is numbered like the 2005. Take a look at your 2005 Form 1040. Line 55 and therefore line 56 will be $3150 bigger. On line 57, you will subtract line 56 from line 46, but you can't end up with a number less than zero. Then continue down from there. That's how the credit would have worked for you last year.