Tax software and clean fuel deduction

No problem with Turbo Tax.

 

Am I missing something or was the $2000 tax credit mentioned above just for LAST tax year, $1500 for THIS year, $1000 next and $500 the year after next? Wanna make sure I get the most for my 4/04 purchase.
8)

 

Yes, you did miss something. The 2000 DEDUCTION, not credit, was extended for 2004 and 2005. After that, it returns to its regularly scheduled reduction of $500 in 2006, unless congress extends it again.

And, another add-on congress just recently passed is if you are in a state that does not have income tax, like here in Florida, you can itemize a tax deduction for sales tax for this and next year. But again, the sales tax deduction is only if you itemize.

 

I used TaxCut last year and there was a line item for the Clean-Burning Fuel Deduction. I will be taking mine this year as well as the Sales Tax Deduction that will be allowed for Washington residents this year.

 

I went to an IRS seminar earlier this week - a taxpayer can either take the deduction for state income taxes paid OR sales taxes paid on schedule A. The way I understood it was you can choose whichever is better for you.

Now, how many of you have been saving all your receipts for 2004 to claim the sales tax deduction? Yep, that's what I expected. Even the IRS spokesperson wondered when the sales tax tables that we used to use years ago would be available for us to use on 2004 returns.

Sorry for drifting away from the clean fuel deduction.

 

Thanks, DanMan! I've obviously been away from this board lately.....sorry for having to have you catch me up. That extra $500 deduction will certainly come in handy. Also, I, too, am a Florida resident. Though I don't have all of my sales tax receipts, I certainly have a big one for the Prius!
Once again, thanks......
8)

 

The original bill always had it as a deduction for a hybrid. The credit was for electric vehicles, and possibly other zero emissions vehicles.

 

Ok I live in FL but I leased my Prius does that matter on the deduction? Wow Its $2000 I thought it was $1500 for 04 models... :roll:

 

m6scott, the law says the reduction in income is for owned vehicles only - leases don't qualify. Sorry.

 

Hey all, if you are a TurboTax user, and trying to apply the Clean Fuel deduction, here's a tip.

Be sure the first checkbox: "does this vehicle use a clean fuel" is checked, or else it won't prompt you for the vehicle model, and won't apply the deduction, and it won't even tell you it thinks your vehicle doesn't apply.
I was hesitant to check this, since it doesn't use a clean fuel, but is in the clean fuel category. It does then apply the $2000 clean fuel deduction to your adjusted gross income, in the same location an IRA deduction is placed. If I hadn't looked here, I might have lost that deduction I am entitled to.

TurboTax, if you are listening, that was a poor way of handling it.

 

Here's a screenshot:

 

Oh, and I agree with Dan; not a good way to handle this situation.

 

Question: Aside from the three hybrids out there in 2004 (Prius, HCH, Insight), to which vehicles could the $2000 deduction apply? Does it even apply to the HCH?

Just Curious,
Brad

 

Yes, it applies to the HCH and, in addition to the others, the Escape hybrid.

 

Thanks Tag for the screenshot. Was going to do that tonight.

 

Now I've heard in the past that IRS spokespeople often have their facts wrong, but this one is glaring. The tax tables that we "used years ago" are already available for 2004 and have been available for quite some time. Here's a PDF of the tables: http://www.irs.gov/pub/irs-pdf/p600.pdf

And to those who will likely use the sales tax deduction, you can use the tables to estimate your "base" deduction, and then add a major purchase to it. So you are not forced to save all your receipts in order to deduct the a car or boat that you might acquire.

 

Just because someone works for the IRS doesn't make them a spokesperson. There are only about 10 spokespersons nationwide for the organization -- in Washington DC and in each of the "Area Offices".

Everyone else.... possibly knowledgeable, possibly not. YMMV

Also, I got Taxcut, and it did put the $2,000 deduction in the proper spot on the return. So I think that if you use either Turbo Tax or Taxcut, it will be able to show the proper deduction on your tax return.

 

I don't like how turbotax worked with the hybrid deduction (as mentioned above) or the sales tax deduction. it should have set up a worksheet or two, instead it asks for your tax rate, then single field for amount to add for big ticket items.
I also replaced my central air this summer, so I added an estimate on salestax for that.
I had to estimate because it had a flat price, and labor is not taxable.