Please, join me to write to the Senate and to the Congress, and to everywhere it might help.

The problem is already posted by pogli in:

You can find the name and address of your Senator here:

Here is the text I prepared to send to the senator of my state:

- - - - -
Senator ................... {the Senator’s Name,}
................{his address}
Washington, DC 20510

Subject: Federal tax incentives for hybrid cars


Dear Senator ............., {the Senator’s Name}

I bought Toyota Prius in June of 2006.
I believed the federal government was serious about fuel efficiency and air quality and the promised tax credit (3150$ for Prius - serious incentive) would help to pay the loan we took.

Recently we looked at the tax forms 1040 and 8910 for 2006 and did approximately the numbers for our family (married filing jointly with two children). It turned out form 8910 discriminates the families with children and we will not get any tax credit for the Prius because we have tax credits for the children.

The story is described here:

The IRS websites:,00.html -
“Form 8910, Alternative Motor Vehicle Credit, is used to claim the qualified hybrid vehicle credit as well as for vehicles qualifying for other provisions of the alternative motor vehicle credit.”,00.html

and here:

From the last website:
"Limitations on the Hybrid Tax Credit:
The hybrid tax credit is a non-refundable tax credit. The credit will reduce your regular income tax liability, but not below zero. The credit will not reduce your alternative minimum tax, if that applies to you. Your regular income tax liability is found on Form 1040, page 2, on the line that reads "Tax." For example, this is found on Line 44 of the 2006 Form 1040.
If you are eligible for multiple tax credits, there are special ordering rules for which credit to take first. The hybrid tax credit is taken last …”

The formula for your maximum hybrid tax credit is as follows:
Regular income tax liability minus the total of all other tax credits (among them: Child tax credit; Hope and Lifetime Learning tax credits; Child and dependent care tax credit; Credit for the elderly and disabled …) minus the tentative minimum tax calculated under the Alternative Minimum Tax rules.

"No Carryover; Any tax liability left over by these reductions will be the maximum dollar limit of your hybrid tax credit. If your hybrid tax credit exceeds your maximum dollar limit, the excess is not refundable, and is lost forever. The excess cannot be carried over to another year, or given away to another person.”

From the above we can see that the hybrid car tax credit works for very limited cases and the more children one has the lower is the chance to get something from it! The number of children does not lower the alternative minimum tax, but it lowers the tax and increases the child tax credits.

Can something be done to change the rule: the more children one has the lower is the chance to get something from it?

My point is:
If the federal government is serious about reducing the oil dependence, the incentives must be simple, easy to apply and with very limited exceptions.
The families with children have a lot of city driving, especially in congested school areas. This is a perfect use of a hybrid car and they deserve the tax credit.

In addition, it is not clear for how long one must keep the car - how to understand on form 8910, page 2, right column "You acquired the vehicle for your use or lease to others, and not for resale".

After writing about a problem I am feeling responsible to suggest a solution:

I would call the current situation “bait and switch”. But I will not feel bad if the unused hybrid tax credit can be carried over (100% and one time only) to the next year.
Another solution is to make the federal hybrid tax credit exempt from the AMT.
A bigger issue is AMT reexamination.


(signature, name)