Understanding the Prius Prime Tax Credit?

Do you mean, how does one do a conversion? Call up, or log in online to, the financial institution(s) that hold your traditional IRAs or 401(K) accounts. Only they can do it for you, and each has its own rules and forms or website tools.

But first, figure out a close estimate of your taxes for this calendar year. This will allow you to figure out if this step is needed at all, and how much money should be converted.

But for a Prime purchase & tax credit this calendar year, the process must also be completed this calendar year, i.e. by the close of business Monday. And with the holiday coming, many may be closing early that day. Any paper forms are unlikely to be processed in time, and customer service folks are very busy with everyone else doing various year-end changes. So only purely computerized on-line processes are likely be meet this deadline, and not everyone does it this way. In the past, I've had stuff take several business days, getting processed two days too late.

And if you still need some study time, I'm even less optimistic it can now be completed on time. I'm not an adequate online tutor, and hold no professional financial certifications whatsoever. And I'm not getting paid for this.

Or everything. A Roth conversion is how (some) assets in a (tax-deferred) Traditional IRA are converted to a (tax paid up) Roth IRA.

Similar steps can happen in 401K accounts, but the last time I was able to make 401K contributions, my particular employer's process was very restricted, and conversion was not possible within this very limited timeframe. Rules have most likely changed since.

 

I hope Turbo Tax can figure this all out. I don't want to go back to an accountant again....

 

TurboTax was my path to nailing down my taxes, despite having only estimates so far. But increasingly well refined as December progressed. Other online tools are available too, some even free of charge. Interested folks should scroll back through this thread for pointers.

TurboTax did erroneously tax my HSA distribution two weeks ago, but had that cleared up by one week ago. I don't believe their 'guarantee' applies currently while we can't even file yet, with some federal forms not ready.

 

Turbo Tax is not working yet with the EV credit. They expect it to be up and running on 1/25/2019. I used them 3 years ago with my Ford Focus Electric and it was a piece of cake.

 

Last tax year I couldn't file fed taxes via TurboTax until form 8936 (hybrid car credit) was ready on 3-1-18!

 

Hmm, someone out there just seen you post that, tracked down your IP, zero'd in a bit further and will claim your refund on Jan 2nd. Personal info is already too easy to get hold of. No need to help them figure out who to target. Take it from someone who's been a victim - don't put this sort of stuff out there.

 

....depending on your state's IRA withdrawal tax policy, yes. Yes my state Virginia does want to tax me on Roth Conversions, so that forces me to convert less than I would otherwise. But still the Prime tax credit allows some add'l Roth conversion at the same total tax.

I don't see why Roth Conversion is more complex now. Same game as before.
The only new wrinkle I can think of is less freedom to change your mind after the conversion.
The old rules allowed changing your mind later and "recharacterizing" to reverse the conversion.

 

Thanks for the advice. Fidelity told me Friday it was too late to do the roll over. (Someone else at Fidelity told me the day before that 2 on Monday would be the deadline for the rollover to take place in tax year 2018...)

Posted via the PriusChat mobile app.

 

I usually go off word of mouth from people I know, usually the wealthiest people I know. Otherwise there is always Yelp. Anyone who sustains a tax business year round is better than HR Block.

 

Conversions IRA to IRA I can normally do instantly between regular Fido IRA accounts.
But you used the term "Rollover" which implies taking money out of a workplace 401K plan, which typically have certain work-place specific withdrawal policy and rules. So I am not exactly sure what your case is.

 

Sorry for stealing the thread, but figured I'd ask here since it's regarding the same topic...

I bought a brand new 2017 model in the 2018 calendar year...assuming that the VIN number hasn't been used before, will I still be able to qualify for this? I didn't think about it until now.

Thanks, and sorry again!

 

It's eligible, as long as you are the first owner.

 

So that sounds like I am not eligible for the tax credit. I bought my 2017 Prius Prime used. I am the second owner.

 

You are correct. You are not eligible. This is also true for leasing a brand new PRIME.

 

Yep, the lessor, the bank or finance outfit that gets your lease payment, is the first owner, so they get the tax credit. They should give this back to you in the form of lower lease payments. That's about as likely as....

 

When I was looking into leasing Honda Clarity earlier this year, Honda Financing was giving the tax credit (for Clarity it is $7500) to the lessee in a form of Lease incentive. This was great for someone like me who will not be able to take full amount of tax credit if I purchased the car. I have not seen similar lease program for PRIME from Toyota. PRIME's lease have been much less attractive deals.

 

Is the tax credit one time only, or if I buy another Prime a couple of years from now, can I get the tax credit again?

 

What I read here is that you can claim as many times as you buy a new car that qualifies for the tax credit as long as the law doesn't change in a mean time.

 

No. You can claim it each time you buy an eligible car, even more than one in a year. The key thing is that this is a non-refundable credit, so to get the entire amount of the credit, your tax liability has to be at least as large as the credit. If not, the credit will only take your tax bill down to zero and no lower.

 

And just to be repetitive, ad nauseum, that is "tax bill" (total tax owed for the year), not "tax refund" (excess withholding over and above your tax bill, refunded to you when you file your return).