Well Lars-ss - you are completely wrong!!! I had finished my taxes in Turbo tax except for the car - I updated today and it let me enter it.... Before I entered the vehicle I had a REFUND ALREADY at $1137 - I added the car and guess what - my refund jumped to $2300..... Looks like I only got half for some reason or other..... Strange....

 

Did you get your car before or after September 30?

 

Same here. My refund increased by $1300, as I bought the car on 11/24/06, which was after the date the refund dropped to 50% of $2600, as shown on the form 8910 instructions.

 

Not that it needs to be said (as the only confusion seems to be on lars-ss's part), but using TurboTax my refund changed from $400 to $3000 after applying the hybrid credit (where in my case my tax liability is well in excess of my refund amount).

I'll echo what's been said:
A non-refundable credit can absolutely increase your refund (it just won't ever increase it past the amount of your withholding).

Non-refundable has a very specific meaning when it comes to tax credits, and its not ok to pretend it means "can't contribute to a refund".

 

I got my car on August 30th - so I should have gotten the full - but for some reason didn't....

 

Wow, after catching up on this thread, homey is glad he has an accountant!!

 

I just re-read your comments to make sure I wasn't being completely stupid, and I still think I am correct. I think the two of you are making a big assumption about my tax return, which is that I have zero tax liability. I never said this was my situation, although I never made that crystal clear (maybe I should write tax laws! ) All I said was that I was getting a huge refund, and I quoted the fine print of the tax credit which says your liability cannot be reduced below zero.

I have a lot of mortgage interest, so that creates a huge deduction on my taxable income. However, after my dedeuctions, I still owe just under $16k in federal taxes on my income before any credits, which is reported on line 46 of my 1040. TurboTax then says I only get $650 in hybrid credit, so my tax liability ends up as $15,296, which is reported on line 63 of my 1040. This is the tax I owe the IRS, so you cannot say that I am not paying taxes this year or that my tax liability is zero. I have withholdings of over $26k (I forgot to change my W-4 after I bought my house) so I am getting a refund of $10k+.

So if my tax liability was ~$16k before credits, why am I not allowed to take the full $2600? I'm going to keep researching and updating my TurboTax software, maybe there is a bug in TurboTax on how it is calculating credits.

 

As a famous golfer once said... "I am such a stupid!" After going over my 8910 very carefully, I finally noticed that I put a purchase and in-service date of Aug 1, 2007. Well, the TCH is only expected to get a 25% credit for that service date, so my credit was cut to $650. DOH! I fixed the date to 8/1/2006, and now I am getting the full $2600 credit.

So many people who have answered me are correct, but I will write two sentences that hopefully make this a bit more clear for others like me:

1) Your pre-credit tax liability (line 46 of your 1040) cannot go below $2600 if you want to receive the full credit, and your total tax liability (line 63) cannot go below $0.

2) If you have more withholdings than tax liability (meaning you get a refund), this has no bearing on your ability to take the tax credit.

 

I'm glad it worked out for you

 

nevermind my previous comment, you are paying a bit of tax. You should adjust your withholdings for next year so the feds don't sit on you $10k all year. My goal with my withholdings is to break even at the end of the year.