I've been using the search feature all morning on this and have my accountant looking into it also (supposedly the update meeting is next monday for the new tax info)...but what's the rules on the federal tax credit for the FEH? I know the values are changing but I thought I read on here that if you already get a refund the credit doesn't do you much good as you can't claim the credit if your already getting a refund...basically you can't use the credit to add more to your refund..is that true? I don't have any kids so any credit I can get is good...but I usually stock up on tools for the business and that gets me a refund every year This would be an O8' hybrid purchase, no way to get one before then obviously.

 

As I understand it the tax credit for the 2008 FEH & MMH is $3,000 for the FWD and $2,600 for the AWD model. The tax credit reduces the amount of tax owed to the Federal Government. It has nothing to do with whether you are getting a refund before you figure in the Hybrid tax credit or not. e.g. - Assuming you have a FWD model, if you are getting a $500 tax refund before the Hybrid tax credit is figured in, then your will get a $3,500 tax refund. If you owe the Federal government $500 before you figure in the Hybrid tax credit, then you will receive a $2,500 tax refund.

The only thing that may reduce your Hybrid tax credit is if your income is high enough that you are subject to the AMT (Alternative Minimum Tax). Your tax accountant can explain the issues there.

 

Last tax year (2006) it was IRS Form 8910. And you don't even have to be paying the AMT for your credit to be "truncated". If all your credits take you to the amount that would have been your AMT...then you stop getting credit dollars. [hard to explain...the tax prep software calculates it automatically]

 

Is the credit a one-time deal (just the year you buy your car)? Or do you continue to get it as long as you own the car, and as long as the credit is offered?

-Pie

 

One time deal. On going? I wish.........

 

I know the full credit is for a new purchase, but is there any credit or deduction for purchasing a used hybrid? I just bought my 2006 FEH used.

 

Yeah, in retrospect, what a colossally stupid question! This is the IRS we're talking about after all!

-Pie

 

Don't forget to check and see if there are any hybrid purchase tax incentives in your state as well.