I did my taxes using turbo. It walks you step by step thru the process of clean vehicle deductions etc. The $2000 deduction for my 05hch comes directly off my income. So if I'm in the 30% tax bracket, it works out to about $600 credit. If you use the IRS as an interest free savings account and expect refunds each year, don't expect the hybrid deduction to amount to very much.

For my MA state tax, it ended up helping me. Went from owing to getting a decent refund/credit. So it helped on both the fed and state.

 

Thing is before I bought my Certified USed 04 HCH I called IRS and asked about the deduction. They told me it would be a percentage of $2000 depending on the car and year. So after I bought the car I called back the IRS and they said sorry the deduction only applies to new Hybrids with original owner. Since I was the 2nd owner even though I bought it from a dealership I don't get the deduction. Unless I can prove that the original owner didn't take the deduction. Now for the State is also original owner unless not registered in the state it was bought. Original owner was in Virginia and I am in Colorado. I think anyone like this should get the deduction for their State since it hadn't gotten any deductions before weither original owner or not.

 

OK I just removed then added it back and it was $307, still a far cry from the $2000 the dealer told me it would be.
Clif

 

As the SPrius and many others indicated, there is a distinction between tax deduction and tax credit. You got a tax deduction. Purchasers of qualifying hybrids in 2006 get a tax credit.

A tax deduction is a reduction of your taxable income, like your standard deduction or mortgage interest deduction. For example, if your taxable income is $52,000, the $2,000 tax deduction would reduce your taxable income to $50,000 and then tax is calculated on this figure. Using a tax rate of 15%, your tax prior to the hybrid deduction would be $7,800. After the hybrid deduction your tax would be $7,500 or a $300 savings.

A tax credit is a dollar for dollar reduction of your tax liability. Using the same numbers above, but assume a $3,000 tax credit, your tax prior to the 2006 hybrid tax credit would be $7,800 but after the hybrid tax credit, your tax would be $4,800.

Get it?? Also, I would never take tax advice from a car dealer.

 

Yeah I "got it" and "get it", in fact as soon as I started doing my taxes I "got it" then I saw they "gave it" to me. When I bought the car I didn't think about the specifics (though if I had I would have "saw it" coming) I just listened when they said the gov was handing out 2K to hybrid owners and that I would get 2K back when I did my taxes.
The thing is when a car says $2000 off we (all) assume it means $2000 off that is what made me stop and even look at it. Turns out it was just a way to lure people in, my point I was trying to make in the beginning is all these people are stating this minus, this minus that, and the other and a hybrid is almost the same cost as a regular civic and that is not true. Regular civic 13K, hybrid 19.5K minus $300 doesn't come close to about the same price, it will take me a loooooooong time to save $6200 in gas between the two. I have always argued in favor of hybrids and will continue to brag about my mileage but if I had it to do over again I would have saved $6200.
Clif

 

If its any consolation, the resale value of our HCH Is is incredible.

The KBB private party value for my HCH is higher than what I purchased my car for in April 2005 ($19K) and a search of used HCHIs sitting on dealer lots in Southern California shows 2003 - 2005 models going for $21-24K. I'm not saying that you'll get $24k for your car, but you might want to cash in on the decent resale value, trade down for a slightly used LX/EX, and pocket the difference?

 

I was a bit jealous when I read that my American friends were getting $2000 back from the government when they purchased a Hybrid. I received a $1000.00 cheque from the Ontario government after I purchased my 2003 HCH six months ago. I was the second owner! Now that I see that it is a tax credit that you get. Major difference. I'll just count myself lucky!
If I resell this car next week (which I won't) the new owner would also be eligible for a $1000. provincial tax rebate just like I received.

 

:-) 10-4.

Remember too that a tax deduction is a reduction in taxable income, but if you don't have more than $2000 of taxable income after your standard deduction and other adjustments, you may not be able to use the full amount. A deduction can not create a "loss", so in deductions you're limited by how much taxable income you have to offset it.

It sucks that the dealer misled you, but when it comes to the IRS, I don't believe what anybody says about my taxes, I check with the IRS directly of call my accountant, especially when we're talking money like two thousand dollars. That's when I found out it only counts on a new car the first time it's put into service, so I didn't qualify because I bought mine used. Though these days with car dealers willing to do your taxes for you if you use the return to buy a car there, maybe they really are getting into the tax business. Still though, I would never trust them with my phone number, let alone all my personal tax info. No thanks.

 

That is pretty amazing if true. What's preventing you from selling the same hybrid back and forth with a friend every month, and each of you gets a $1000 check from the Canadian government every other month?

 

http://www.irs.gov/newsroom/article/...104549,00.html