Hybrid tax credit bait and switch
#21
02-03-2007, 11:07 AM
Veracitorian Muser
Join Date: Jun 2006
Location: Tempe, Arizona
Posts: 335
Re: Hybrid tax credit bait and switch
If you still disagree with me, as well as disagree with gumby and TeeSter and ck90211 and chilly and DebbieKatz and leahbeatle and occ, in other words EVERY OTHER POSTER IN YOUR CITED THREAD, then I am afraid this will have to wait until actual refund checks are received and reported by forum members, although at this point I am not confident even that would convince you.
Yes, your obstinacy on this point has frustrated me!
-- Alan
#22
02-03-2007, 11:07 AM
Pretty Darn Active Enthusiast
Join Date: Dec 2006
Location: Out there somewhere
Posts: 407
Re: Hybrid tax credit bait and switch
I beg to differ....
If you read the article I posted a link to back in September, it clearly explains that the tax credit is "non-refundable." Which means it cannot EVEN BY ONE DOLLAR increase the CASH REFUND you get from the IRS. Regardless of AMT situation.
In an non-AMT situation, if you end up with all your other tax obligations with a $500 refund, the hybrid tax credit will be lost to you completely.
It will apply only if you OWE taxes - at that point it can reduce the amount you owe by the amount of the credit you receive. If you owe $500 but your tax credit is $2,100, then the other $1600 is lost to you, not refunded to you.
The hybrid tax credit CANNOT increase your refund under any circumstances. Is it "non-refundable" meaning it cannot be re-funded back to you in the form of a refund.
If you read the article I posted a link to back in September, it clearly explains that the tax credit is "non-refundable." Which means it cannot EVEN BY ONE DOLLAR increase the CASH REFUND you get from the IRS. Regardless of AMT situation.
In an non-AMT situation, if you end up with all your other tax obligations with a $500 refund, the hybrid tax credit will be lost to you completely.
It will apply only if you OWE taxes - at that point it can reduce the amount you owe by the amount of the credit you receive. If you owe $500 but your tax credit is $2,100, then the other $1600 is lost to you, not refunded to you.
The hybrid tax credit CANNOT increase your refund under any circumstances. Is it "non-refundable" meaning it cannot be re-funded back to you in the form of a refund.
I may have to disagree. Let me tell you why. We currently do not own the TCH but will hopefully own one by 3/31 of this year. Anyway, I did our taxes last night using Turbo Tax. This year we are getting a refund. I decided to go back into turbo tax and input all my same information AND included information showing I bought a TCH last year in December (for hypothetical purposes). This means my hybrid credit would be $1300 according to the IRS. Well after finishing my return WITH the hybrid purchase information my refund increased by $1300. That leads me to believe that you can increase your refund by the credit amount. Turbo tax also said I didn't owe any AMT.
The Hybrid tax credit is put on form 1040 on line 55. What line 55 does in decrease your tax liability by that credit amount. So if your tax liability is $5000 and your hybrid credit is $2600 then your net tax liability would be $2400 ($5000-$2600). So when you decrease your tax liability you will increase your refund (or decrease the amount you owe).
#23
02-03-2007, 11:10 AM
Pretty Darn Active Enthusiast
Join Date: Dec 2006
Location: Out there somewhere
Posts: 407
Re: Hybrid tax credit bait and switch
You are referring to this link. Please pardon me for being tactless, but you are, plain and simply, WRONG. You do not understand the terms liability, withholding, credit, etc. and how they apply to federal taxes. You misunderstood what you read, and ignored the many clear attempts to correct your misunderstanding. Please stop misleading people on this.
If you still disagree with me, as well as disagree with gumby and TeeSter and ck90211 and chilly and DebbieKatz and leahbeatle and occ, in other words EVERY OTHER POSTER IN YOUR CITED THREAD, then I am afraid this will have to wait until actual refund checks are received and reported by forum members, although at this point I am not confident even that would convince you.
Yes, your obstinacy on this point has frustrated me!
-- Alan
If you still disagree with me, as well as disagree with gumby and TeeSter and ck90211 and chilly and DebbieKatz and leahbeatle and occ, in other words EVERY OTHER POSTER IN YOUR CITED THREAD, then I am afraid this will have to wait until actual refund checks are received and reported by forum members, although at this point I am not confident even that would convince you.
Yes, your obstinacy on this point has frustrated me!
-- Alan
#24
02-03-2007, 11:34 AM
Pretty Darn Active Enthusiast
Join Date: Feb 2006
Posts: 276
Re: Hybrid tax credit bait and switch
The point of the thread is not to state if you felt someone else was deserving or not deserving of the credit. If you feel I don't deserve the credit, then you should probably also state how everyone else who has to pay AMT should not be complaining, because the sole purpose of the AMT is so people with higher incomes don't find all kinds of tax credits to end up with no liability.
If I read your post correctly you state that you are not getting the FULL credit because you have ZERO tax liability.
This implies you expect the government to send you a check for the remaining credit even though you did not pay ANY taxes this year. In other words you make money on the purchase of your vehicle. I don't see how anyone can seriously believe that the the government OWES them money when they sent NOTHING to the government this year. This defies logic to me.
#25
02-03-2007, 11:35 AM
Active Enthusiast
Join Date: Aug 2006
Posts: 99
Re: Hybrid tax credit bait and switch
I'll be honest here - I don't dive to deeply into my taxes and I can't calculate it yet in Turbo Tax until the form is releaseed on or about the 16th...
On my form 6241 - AMT......
Line 33 = Tentative Min Tax = 12,842
Line 34 = Tax from 1040 = 15,956
Line 35 - AMT = 0
Will I get anything or all of it? I'm confused and reading up on AMT only confuses me more!
On my form 6241 - AMT......
Line 33 = Tentative Min Tax = 12,842
Line 34 = Tax from 1040 = 15,956
Line 35 - AMT = 0
Will I get anything or all of it? I'm confused and reading up on AMT only confuses me more!
#26
02-03-2007, 12:47 PM
Pretty Darn Active Enthusiast
Join Date: May 2006
Location: Tacoma, WA
Posts: 368
Re: Hybrid tax credit bait and switch
Seems the only thing clear here is the tax code is rediculiously confusing. I was planning on trusting my tax returns to a $30 computer program (I sure hope Walla Walla has cells with nice outside views) and run TurboTax after Feb 16.
Wish me luck.
Wish me luck.
#27
02-03-2007, 02:25 PM
Ridiculously Active Enthusiast
Join Date: May 2006
Location: West Michigan
Posts: 620
Re: Hybrid tax credit bait and switch
You are referring to this link. Please pardon me for being tactless, but you are, plain and simply, WRONG. You do not understand the terms liability, withholding, credit, etc. and how they apply to federal taxes. You misunderstood what you read, and ignored the many clear attempts to correct your misunderstanding. Please stop misleading people on this.
If you still disagree with me, as well as disagree with gumby and TeeSter and ck90211 and chilly and DebbieKatz and leahbeatle and occ, in other words EVERY OTHER POSTER IN YOUR CITED THREAD, then I am afraid this will have to wait until actual refund checks are received and reported by forum members, although at this point I am not confident even that would convince you.
Yes, your obstinacy on this point has frustrated me!
-- Alan
If you still disagree with me, as well as disagree with gumby and TeeSter and ck90211 and chilly and DebbieKatz and leahbeatle and occ, in other words EVERY OTHER POSTER IN YOUR CITED THREAD, then I am afraid this will have to wait until actual refund checks are received and reported by forum members, although at this point I am not confident even that would convince you.
Yes, your obstinacy on this point has frustrated me!
-- Alan
And once again we are back to him claiming that the credit CANNOT increase the amount of your federal tax refund. Ugh. This is NOT TRUE.
It can absolutely increase your refund if your tax liability is greater than the amount of the credit. Taxes owed on April 15th are not your tax liability, this is the amount is the difference between your tax liability (less tax credits) and the amount of withholding for the year.
Decreasing your withholding will not help the situation - in fact, it might even cost you penalties for underpayment (underwithholding).
Last edited by spiff72; 02-03-2007 at 02:28 PM.
#28
02-03-2007, 02:43 PM
Enthusiast
Join Date: Oct 2006
Location: Lincoln, CA
Posts: 6
Re: Hybrid tax credit bait and switch
I'll be honest here - I don't dive to deeply into my taxes and I can't calculate it yet in Turbo Tax until the form is releaseed on or about the 16th...
On my form 6241 - AMT......
Line 33 = Tentative Min Tax = 12,842
Line 34 = Tax from 1040 = 15,956
Line 35 - AMT = 0
Will I get anything or all of it? I'm confused and reading up on AMT only confuses me more!
On my form 6241 - AMT......
Line 33 = Tentative Min Tax = 12,842
Line 34 = Tax from 1040 = 15,956
Line 35 - AMT = 0
Will I get anything or all of it? I'm confused and reading up on AMT only confuses me more!
Just did my taxes with Turbo Tax this morning. The 8910 for the credit is now there, just labeled "Form Not Final - Do Not File". Based on the numbers in your post, you will get the complete credit as your "regular" tax exceeds the tenative minimum tax by more than the amount of the credit (15,956.-12,842=3,114). Thus if you are entitled to a 2,600 credit your tax bill of 15,956 will be reduced by the 2,600, owing 13,356. No matter how much you had withheld. The difference in my return between the regular tax and the tmt was 5,670 on the Form 6251. The 1040 showed me getting the whole 2600 credit on line 55 thus reducing my overall tax bill by that amount.
#29
02-03-2007, 04:00 PM
Ridiculously Active Enthusiast
Join Date: Jul 2004
Location: Phoenix, AZ
Posts: 1,430
Re: Hybrid tax credit bait and switch
I just did my taxes at TaxCut website.
I owed $2389 before my hybrid tax credit, which I then used to reduce my tax liability to ZERO.
Not BELOW zero.
I lost $211 of the credit, which is NOT REFUNDABLE to me.
That's what I warned people about in September - If you are going to OWE taxes at the end of the year, make sure the amount you are going to OWE is MORE than your hybrid tax credit so that you do not lose some of it.
I almost hit it perfect by reducing my withholding in September. Had I waited longer I would have lost more of it.
I owed $2389 before my hybrid tax credit, which I then used to reduce my tax liability to ZERO.
Not BELOW zero.
I lost $211 of the credit, which is NOT REFUNDABLE to me.
That's what I warned people about in September - If you are going to OWE taxes at the end of the year, make sure the amount you are going to OWE is MORE than your hybrid tax credit so that you do not lose some of it.
I almost hit it perfect by reducing my withholding in September. Had I waited longer I would have lost more of it.
#30
02-03-2007, 06:30 PM
Ridiculously Active Enthusiast
Join Date: May 2006
Location: West Michigan
Posts: 620
Re: Hybrid tax credit bait and switch
I just did my taxes at TaxCut website.
I owed $2389 before my hybrid tax credit, which I then used to reduce my tax liability to ZERO.
Not BELOW zero.
I lost $211 of the credit, which is NOT REFUNDABLE to me.
That's what I warned people about in September - If you are going to OWE taxes at the end of the year, make sure the amount you are going to OWE is MORE than your hybrid tax credit so that you do not lose some of it.
I almost hit it perfect by reducing my withholding in September. Had I waited longer I would have lost more of it.
I owed $2389 before my hybrid tax credit, which I then used to reduce my tax liability to ZERO.
Not BELOW zero.
I lost $211 of the credit, which is NOT REFUNDABLE to me.
That's what I warned people about in September - If you are going to OWE taxes at the end of the year, make sure the amount you are going to OWE is MORE than your hybrid tax credit so that you do not lose some of it.
I almost hit it perfect by reducing my withholding in September. Had I waited longer I would have lost more of it.
Secondly, if you lost $211 of the credit, then you must have had tax credits (including the hybrid credit)/deductions that were nearly equal to the amount of tax liability that you had. If you had NOT changed your withholding in September, you STILL would have lost $211 of your credit. Withholding DOES NOT MATTER in this situation.
The amount that you OWE after calculating your taxes is NOT your tax liability. It is the amount that you must pay to fulfill the part of your tax liability that wasn't covered by your federal withholding.
This is a direct quoted example from the thread you posted in:
Let's give two examples to explain the concept. Joe is a salaried employee and earns $50,000 a year. His federal income tax withholding amounts to $8,595 for the whole year. (Let's also assume Joe is single with no kids.) I calculate a 2004 tax liability of $7,256 with no other deductions or credits. Based on this straightforward situation, Joe would have a refund of $1,339. (Tax liability minus withholding.)
Now, Joe is thinking about buying a hybrid car. The anticipated hybrid car tax credit will be $3,150. This tax credit first reduces Joe's tax liability (but not below zero). So Joe's tax liability is now $4,106. (Gross tax liability minus hybrid car tax credit.) This in turns boosts Joe's tax refund to $4,489. So it does look like the hybrid car tax credit increased Joe's refund. But it's really reducing his liability.
Mary, Joe's sister, is also thinking of buying a hybrid car. But Mary's tax liability is (let's say) $1,000. If she buys the same car with a $3,150 tax credit, only $1,000 of that tax credit will be applied to her taxes. The rest of the credit will sit unused. Yes, it will still boost her refund, but not as much.
Now, Joe is thinking about buying a hybrid car. The anticipated hybrid car tax credit will be $3,150. This tax credit first reduces Joe's tax liability (but not below zero). So Joe's tax liability is now $4,106. (Gross tax liability minus hybrid car tax credit.) This in turns boosts Joe's tax refund to $4,489. So it does look like the hybrid car tax credit increased Joe's refund. But it's really reducing his liability.
Mary, Joe's sister, is also thinking of buying a hybrid car. But Mary's tax liability is (let's say) $1,000. If she buys the same car with a $3,150 tax credit, only $1,000 of that tax credit will be applied to her taxes. The rest of the credit will sit unused. Yes, it will still boost her refund, but not as much.
