Tax Credit - fight for your rights
Created February 11, 2007, at 4:29 pm by pprius2006
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: http://www.hybridcars.com/forums/joke-tax-credit-t1225.html
You can find the name and address of your Senator here: http://www.senate.gov/general/contact_information/senators_cfm.cfm
Here is the text I prepared to send to the senator of my state:
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Senator ................... {the Senator’s Name, http://www.senate.gov/general/contact_information/senators_cfm.cfm}
................{his address}
Washington, DC 20510
Subject: Federal tax incentives for hybrid cars
02/10/2007
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:
http://www.irs.gov/newsroom/article/0,,id=157557,00.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.”
http://www.irs.gov/newsroom/article/0,,id=157863,00.html
http://www.irs.gov/pub/irs-pdf/f8910.pdf
and here:
http://taxes.about.com/od/deductionscredits/a/hybridtaxcredit_2.htm
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.
Sincerely,
(signature, name)
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A little FYI for those who read this post. I just finished my taxes for 2006. The credit for a Toyota Prius purchased in the first half of 2006 was touted to be $3150. The actual credit I got after the voodoo tax rules were applied was $638 - which, as I have been told by other Prius owners, was a lot higher than theirs. The other $2512 is simply lost forever. Send your letter, but I can't imagine it will do any good. Our current administration (look at their backgrounds, the overwhelming majority of them are oil men & women) has no real interest in promoting energy conservation. Every hybrid car purchased reduces their profits.
i guess i understand it. it basically goes that this credit goes last. the reason why you only got $638 is that your tax liability was $638. your effective tax rate is 0%.
That's just taxes I guess. When i was in school, i couldn't use all of my lifetime credit because i made too little money.
- - -
. . .
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.
Sincerely,
. . .
- - -
Please contribute more suggestions.
i would say just be aware of this and if you are banking on getting a tax credit, make sure your tax liability is that high. you could also try different scenarios like married filing separately/jointly. i think this is more of a tax issue more then government trying to screw you over. if your income tax liability for the year is already 0, then do you really expect the government to take someone else's tax money to give to you?
i guess a carryover of 1 year would probably satisfy both parties
http://www.hybridcars.com/hybrid-tax-credit-alternative-minimum-tax.html
Form 8910, Line 16:
"Although you may not owe alternative minimum tax
(AMT), you must still figure the tentative minimum tax
(TMT) to figure your allowable credit. Complete and
attach the applicable AMT form or schedule and enter
the TMT on line 16."
You do not have to be rich, it affects:
Single or head of household above $42,500;
Married filing jointly or qualifying widow(er) above $62,550;
Married filing separately above $31,275.
Two or three children with their tax exemptions (multiply $3,300 by the total number of exemptions claimed) plus their tax credits and there is no room left for hybrid car tax credit - the tax gets too close to the AMT or the tentative AMT.
Before buying our Prius I checked about alternative minimum tax and I found we were not going to be subject of it (AMT) at the end of the year. Now we are still not, but they are hitting us with “tentative” AMT.
i change my stance on allowing rollover for hybrid credits. they should change the AMT laws instead....
We just found out this weekend that we weren't getting our $3150.00 credit also. It was a combination of everything mentioned above: The AMT and the fact that we have two young kids in daycare. I feel ripped off.
After reading the fine print, it seems to me that this "credit" was carefully constructed to pay nothing (or as little as possible) to as many people as possible.
You'll excuse me if I now feel even more skeptical when Bushie talks about additional credits for plug-in Hybrids.
Tax relief for the middle-class MY A**!:mad:
Things aren't always what they seem. The credit wasn't my only reason for buying the HCH, however it certainly was the tilting factor. I did receive the credit, but not 100% of it. It did lower my tax liability to zero and we received 100% of our Federal tax back in our refund (which I will not complain about). We are not wealthy or poor, just middle-class with children. It is still a bit of a stinger to know that the additional credit disappears into thin air!:mad: :confused:
:mad: We purchased a Ford Escape last year, and looked forward to the tax credit of $2600. I just finished my taxes, and the credit has withered to $316.
It is obvious to me, especially after reading the other comments on this subject, that our government never intended to allow a significant credit to occur. This is another deceitful con-job, blowing in the ear of we environmentalists. Anybody who can afford to pay $3000 extra for a fuel-efficient automobile, has been defined by the tax code to be unqualified for a real credit.
Our background: no dependents (kids gone), no AMT, normal duductions.
I share your frustration. As hybrid car owners we are doing something for cleaner air, less noise, less oil dependence and we are testing new technology at our own expense. Until recently we believed we were recognized and rewarded for this. Let's do something for the next hybrid car buyers.
I encourage you to actively push the policymakers to address this issue. Please write to your representatives to urge AMT reform and to provide clearer guidance on the AMT-hybrid tax credit. The concept “tentative” AMT is very tricky.
Please raise awareness of this issue. It has implications beyond the hybrid tax credit for many Americans. Please write to everybody who might help; write to TV and radio broadcasts, online forums, and perhaps, to the editor to your local newspaper. I truly believe that increased public awareness and pressure on decision makers will make it more likely that the federal hybrid tax credit will be made exempt from the AMT (not for 2006, too late) and, perhaps, the AMT will be reexamined.
Believe me being in sales and the top Performer in Hybrid sale on the East Coast ........... my clients have been upset and mad at this developement ........ We are doing something ......... calling in markers and such. One of my clients has done this :
" ( quote) solid car, you're a stand-up guy. it was the hit of jessica's bridal shower. I gave the Grateful Dead a loud stereo workout later. the ride is tremendous, almost like a Lexus..............Senator Boxer, who owns 2 Priuses, is a very good friend of ours (her daughter has worked for me several times) and she is Chair of the Senate Environment and Public Works Committee. I'll talk with her and her chief of staff about the legislation below...........(end quote)"
It works, if you work it .......... if everyone just drops one pebble in the pond, ect......... I hate being philosophical (sp)..........:confused:
Let's go people!!!!!! Get :mad:
TQ;)
Internet Sales
(571) 276-7548
You've already received FREE cash from the federal government courtesy of me (and countless other working class, childless Americans) and you've got the nerve to whine about this? A heartfelt "thank you" would be more appropriate.
Indignant parents, many of which have incomes 2 times my own, screaming for more and more entitlements makes me ill. Live within your means or don't breed. I really can't afford to support your kids and I really can't understand why I'm expected to take vastly more financial responsibility for them (in terms of tax burden) than you. Did I miss something? Is my disproportionate contribution towards the education and development of your children considered a pre-payment for future services? When your kid grows up and becomes a heart surgeon, will my operation be considered "paid in full" before I get to the table? Nope...
As for the hybrid credit, I'm all for it, provided it's not stacked up over undeserved entitlements like the child tax "credit". Encouraging people to buy more efficient cars spurs demand, and in turn competition. The end result would be a good thing: less expensive, more environmentally friendly vehicles. Encouraging people to breed by fleecing the childless isn't such a good thing. Kids are an economic and environmental liability, not a boon.
http://www.helium.com/tm/147727
Awww, shucks...come on guys! Our government doesn't lie to us!
And, neither did the Ashhole salesman who said it was LEGAL to drive in the HOV lanes in Maryland! Maybe that buttnugget piece of crap can pay the $90 fine.
Something I realized today:
People don't question things when they are in their favor, HOWEVER we do question them when they are not. Question everything because what works in your favor today may work against it tomorrow.
Boo to salesman and the government. :mad:
All my love,
Crybrid
Looks like Zakarious is a proud crybrid owner too! Whoop de doooo! :D
As someone who purchased two hybrid cars in 2006 specifically for the purpose of knowing I would be getting a credit - I am outraged. I'm computing my taxes and can't believe this particular credit is being treated differently from the others. I don't recall anyone saying a tentative minimum tax liability would be calculated first and then compared to what your tax liability is after your child tax credits were taken into account. Yes I'll be writing my senator and such. Yes I'll see if a class action can be taken on this. This is just very very wrong! :mad:
Did my taxes today and sadly discoverd the big gotcha on the sham hybrid tax credit. Spent the afternoon figuring how this farce of a credit turned out to be worth $0 in my case. Here's the letter I wrote to my congressman as a result. I urge others to write theirs. The deceitful republican crowd is out. Lets make the democrats do the right thing.
April 7, 2007
The Honorable Steny H. Hoyer
United States House of Representatives
1705 Longworth House Office Building
Washington, D.C. 20515-2005
Dear Representative Hoyer,
As residents of the 5th Congressional District in Maryland, we are writing to express outrage at the deceptive manner in which the Alternative Motor Vehicle Credit (AMVC) was implemented by Congress in the Energy Policy Act of 2005. We are also asking you to offer legislation that would remedy the unfair and misleading aspects of this credit. The credit was touted as an example of the U.S. government’s commitment to support the use of more fuel-efficient automobiles. This is a critically important objective that we support, both to reduce our dependence on foreign oil and to lessen the rate at which we increase atmospheric CO2 due to its role in global warming. However, because of the way our complex tax code is structured, the credit is in reality a non-existent sham for many American middle-income couples with children filing a joint return.
Let us first give you some background information and then explain the tax implementations of this credit as we understand them. We purchased a 2006 Honda Civic Hybrid in July, 2006. Before purchasing the vehicle, we referred to the Internal Revenue Service documentation available on their web site regarding the AMVC where we learned the vehicle was eligible for a $2,100 credit. It was because the credit was available, and partially offset the increased cost of the Civic Hybrid as compared to a regular Civic, that we decided to purchase the Hybrid. The IRS web site provided detailed information about eligible vehicles, purchase requirements, and the phase out of the credit with increasing unit sales by the various manufacturers offering hybrid vehicles. The web site even urged consumers to “purchase early” before the phase out provisions reduced the amount of the credit. But there was no information presented on the manner in which the credit would be treated for tax purposes and the form used to compute the tax consequences (Form 8910) was not yet available.
In preparing our 2006 taxes, we now come to learn that we are in fact NOT eligible for the credit. Why? Most tax credits that are used by typical families (nonrefundable personal credits), such as the Child Tax Credit, Child and Dependent Care Expense Credit, Elderly and Disabled Credit, Education Credit, and Residential Energy Credit, are straightforward in their application. You subtract the amount of the credits from your total tax liability (whether that be your Regular Tax or the Alternative Minimum Tax). On IRS Form 1040 it is where Lines 47 through 54 are subtracted from Line 46. This is simple and understandable, and consistent with what should be meant by a tax credit. Nonrefundable personal credits have functioned this way since 2000.
Not so the AMVC. We spent several hours unraveling why the tax preparation software we use was reducing our $2,100 credit to $0. Unknown to us, and we suspect most families, the AMVC is treated differently than nonrefundable personal credits for tax purposes. Even though we are not subject to the Alternative Minimum Tax, it comes into play when computing the applicable amount of the AMVC. The AMVC cannot be used to reduce your taxes owed below your Tentative Minimum Tax, computed as part of the Alternative Minimum Tax determination on Form 6251. For our family, our Regular Tax Before Credits is $11,142 and is larger than our Tentative Minimum Tax of $9,321. Therefore, our Alternative Minimum Tax is $0 and we are not subject to the AMT. However, our nonrefundable personal credits (in our case a Child Tax Credit of $2,700) reduce our Net Regular Tax to $8,442. Because our net tax is below our Tentative Minimum Tax, we are not eligible for the AMVC and it is reduced to $0.
This application of the AMVC is because of the obtuse language of the Internal Revenue Code, Section 30B, Paragraph (g)(2) authorized in the Energy Policy Act of 2005. That paragraph defines the application of the AMVC with other personal credits:
The credit . . . shall not exceed the excess (if any) of--
(A) the regular tax liability (as defined in section 26(b)) reduced by the sum of the credits allowable under subpart A and sections 27 and 30, over (B) the tentative minimum tax for the taxable year.
It is this treatment of the Alternative Motor Vehicle Credit in a manner unlike the credits most familiar to American families that we find so deceptive. For many two-earner, middle-income families with children, their Net Regular Tax is below their Tentative Minimum Tax, making the AMVC a worthless fiction. Adding to the unfairness, the number of families for which this is the case will increase in the future because the AMT is not inflation-adjusted. The AMVC for the most part is really only a credit for poor people, rich people and a small subset of middle-income earners who do not already have credits of the kind that supercede the AMVC.
After realizing we were not eligible for the AMVC, we searched the internet and found a number of web sites and blogs that described this problem, which came to light as people began preparing their 2006 tax returns. However, we are terribly disappointed to find that U.S. Government web sites continue to be silent on this point and do not describe the tax aspects of this credit. In particular, the main web sites of the Department of Energy and the Internal Revenue Service devoted to this credit have no information on this matter:
Department of Energy
http://www.fueleconomy.gov/feg/tax_hybrid.shtml
http://www.energy.gov/taxbreaks.htm
Internal Revenue Service
http://ftp.irs.gov/newsroom/article/0,,id=107766,00.html
http://ftp.irs.gov/newsroom/article/0,,id=157557,00.html
http://ftp.irs.gov/newsroom/article/0,,id=157632,00.html
Please remedy this situation by changing the Alternative Motor Vehicle Credit so that it is treated for tax purposes like nonrefundable personal credits that are not rendered worthless by the Alternative Minimum Tax. As it exists now, obscure in its tax consequences and lacking clear explanation of its real effect, it is a shameful bait and switch that only serves to further undermine taxpayer confidence in the fairness of our tax code and the integrity of our governing officials. Thank you for your consideration of this matter.
Yes, our government does lie to us all the time. Yes this tax was developed to help but with limits to the tax consquences to the Federal treasury.
You want to know who opposed the more liberal tax credits for these gas saving, less polluting cars ??
I will give you one big Hint. The leader now of this group that opposed the more liberal use of this tax credit, just made a TV apperance to Syria.
Yes, the democrats voted down the more liberal use of this credit, so as not to hurt some other wasteful spending programs. They voted against any carryovers to the next year, and making this the number one tax credit on the 1040 list.
So remember who hates TAX Cuts the most, the LIBERAL DEMS.
I have been following the legislation of car credits since the Ford Pinto, and there are always these watered down tax credits, no matter how important the cause. Just remember the dire times of the Gas lines in the 70's when Jimmy Carter was in office, and before. Well they did'nt do much then about cutting back on gas usage with brilliant legisilation, and the Dems have been in control most of the time. We do need a large voice to let them know how important this is to people to help in changing our wasteful ways.
SPEAK OUT EVERYONE!!
I bought a Civic Hybrid in December 06 (before the end of the year) so I could get the $2100 tax credit on my 06 taxes. I was aware of the credit phase-out after 60,000 vehicles sold by a manufacturer (which did not impact the Civic) but was completely unaware of the possibility that my credit might affected by the minimum tax and my child tax credits. It certainly was not highlighted in my information sources. I was pretty shocked when Turbotax informed me that I would get zero credit. My first thought was that it must have been some sort of mistake. I had to open up the forms/worksheets to see what was going on and then discovered what was happening.
It was very frustrating to lose $2100 that I was 100% certain was going to be in my pocket in early 2007. Even if Congress does makes a change to adjust the credit so more people could get it, I assume it is very unlikely they would allow 2006 hybrid purchasers to get the credit.
I am curious,
How the hybrid car tax credit, applied without the alternative minimum tax (AMT) restriction and taken as a combined loss to the budget, would compare to the federal incentives the oil companies get?
I do not know what they get (tax credit or something else); it is a dark area to me. :confused:
Does anybody know?
First of all, if you honestly believe that you are helping Americas "gas crisis" and stoping "pollution" by buying a Hybrid car, YOU ARE A MORON.
Fact 1 - A Hybrid car STILL uses GAS. Your not saving american soldiers in iraq, your not telling "Big Oil" to screw themselves, All your doing by buying a hybrid is adding to the gas crisis by showing that you don't care if you only get 15to20mpg more than a non-hybrid car, especally when you spend $10,000 or more to have that coveted "Hybrid Car".
Fact 2 - Hybrids get what 50mpg to 60mpg if that, wow, non hybrid cars such as Volkswagon diesels get 40mpg to 50mpg as well as honda civics and other toyata non-hybrids that get well over 30mpg, without having to use the much vaunted "electric engine" and with a cost that is thousands of dollars less than a hybrid.
(What a concept, if you by a car that gets 20mpg LESS than a hybrid, for say $5000 LESS than a Hybrid You now would not have to worry about gas seeing that $5000 in your pocket is worth at least 3 years in gas. "But if I buy a Hybrid for $5000 more I will save on gas!", Sure you will, If your a MORON. You will pay thousands of dollars more for car that saves a couple 10-20mpg,
SIMPLE MATH = Can a Hybrid save money?
Non-Hybrid car - I can buy a $5000 non-hybrid used car and put $2000 away for gas for 2 years, Now I have a car for $7000 with gas for 2 years.
Hybrid car - $20,000+ and add the gas for 2 years to that, only $1500 for gas for 2 years compared to $2000 for a non-Hybrid because hybrids get "such" better gas milage.
So in conclusion - Does the hybrid car "really" save you money? hum, $7,000 compared to $20,000 plus.
Fact 3 - How much pollution is put in the air from the production plants making these completly worthless Hybrid cars.
Conclusion - Some people think that by buying a hybrid car that they are helping save Americans, the communtiy, the planet, etc.
THIS IS ALL BULLSHIT.
Please see through the "HYBRID HYPE" and REALIZE that HYBRID CARS STILL USE GAS!!!
And if you are still using GAS you are not solving any "problems" related to the gas crisis, you are only further perpetuating the current gas crisis.
Hi TheTruth,
Thank you for the honest opinion. I do not take it as a hybrid hate.
What would you have thought about the transistor after it was invented, see how big and ugly it was, also it was expensive.
http://ece.uprm.edu/~mtoledo/6055/
Would you have stopped this development 60 years ago because there was no cellphone or laptop yet. May be you would have supported it, having intuition about its potential.
Now please read here:
http://www.nrel.gov/vehiclesandfuels/energystorage/feature_vision.html
"On the powertrain side, the internal combustion engine will continue to improve and evolve with advances in emission control and fuel efficiency. The hybrid electric powertrain will become a standard option for consumers when buying vehicles."
You write about "Volkswagon diesels" - I expect to see soon Volkswagen bio-diesel-hybrid.
Do you think the oil people like this type of science, research and practical implementation? They do not understand physics and electronics and they control enormous economical power as it is; why study - it is not easy. I do not expect they will volunteer to share their power with people who have taken courses in solid state electronics. Do I? - http://www.bp.com/multipleimagesection.do?categoryId=3050522&contentId=3050769 - the real world is more fantastic than one can imagine - keep your eyes open.
I do not hate Exxon Mobil, only I do not stop at their gas stations until they recognize officially the science about the global warming.
But the whole point was not about technical or price discussion.
It was that somebody makes a big impression about giving substantial incentives to compensate partially for the price difference you are writing about (and we believed it), while intending to spend as less as possible. According to some conspiracy theories this could be related to the above ("Who killed the electric car?" - did you see the movie?).
Here is how the oil companies are being treated – not like the hybrid buyers.
http://www.pbs.org/now/shows/319/index.html
"After filing a lawsuit under the False Claims Act, which protects and encourages whistleblowers, Maxwell lost his job. This week, NOW talks with Maxwell about the personal and professional price he says he paid in pursuit of fairness, and examines an industry under fire for keeping too much of the enormous revenue it makes for drilling on land and waters owned by us all. Are oil and gas companies being protected—and even feted—by the government agency charged with regulating them?"
Hmm...
Well, I agree with *some* of the statements by a previous poster that the married w/children crowd already enjoy many tax benefits. Finally a tax benefit that benefits us single people with no kids. Whoulda thunk it!
I can understand as well, however, that this credit's limitations did fly a bit under the radar and caught people off gaurd.
On the other hand, I've seen many, many sites that warn you to check with your tax professional before considering this credit a "done deal".
I guess I'm in the minority - I really thoroughly research a vehicle purchase - everything from driveability to warranty options to manufacturer incentives. It is a huge financial commitment for me and I don't want to be saddled with a 20k albatross nor do I want to realize in a year I could have saved several thousand by putting in a couple dozen hours of homework.
I ran across the limitations of this credit pretty fast in my attempt to see whether a hybrid pencils out over the long run. I'm still debating whether going with a hybrid is the way to go.
From what I've seen, they are, by and large, still "toys" for 2-income households and the semi-affluent. I find it ironic because in the 80s and 90s a slimmed down vehicle with great gas mileage was the territory of the starving college kid. Now it's a status item. Gotta love this country.
http://www.hybridcars.com/hybrid-tax-credit-alternative-minimum-tax.html
"As long as the AMT remains in effect, any future legislation that gives tax payer credits for energy conservation will exclude the growing number of Americans who pay {as we figured out we we can add here: or a close to pay AMT}. Any serious government proposal about encouraging consumers to buy hybrids, plug-in hybrids, electric cars, or flex-fuel vehicles via tax credits must consider the effects of the AMT."
http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/BuyingAHybridWaitingMayCostYou.aspx
The end of the article:
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Bad news for AMT victims
One last need-to-know fact: You will be stiffed out of all or part of your rightful vehicle tax credit if you get hooked by the dreaded alternative minimum tax (AMT) for the year you buy the vehicle. Why? Because none of the credits explained in this article can be used to reduce an individual taxpayer's federal income-tax bill below his or her AMT liability amount (reduced by certain other credits).
If this ticks you off, write to your lawmakers to demand the repeal of the AMT. {!:mad: }
This article was reported and written by Bill Bischoff for SmartMoney.
Published Sept. 13, 2007
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