Tax Credit for Toyota Prius Owners
It is very nice of Uncle Sam to offer any incentive for purchasing a hybrid car at all in addition to the money you are saving on the gas. I’m not sure how the car manufacturers were able to pull it off and I’m pretty sure I don’t want to know, but it’s there for you if you bought your Prius in 2006 or the first nine months of 2007. Read on for how to apply for your credit
U.S. Government’s Fueleconomy.gov website provides wealth of information about the alternative vehicle tax credit, and below is a compillation for Toyota Prius owners.
Note that this is a credit, not a deduction, which simply means that this is your money!
If you bought your Prius before Jan 1, 2006, you can still apply for a hybrid vehicle tax deduction (up to $2000), which is not so sweet of a deal but still beats getting nothing.
The table below gives a hint: buy your Prius before March 31, 2007!
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Jan. 1 – Sep. 30, 2006
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Oct. 1, 2006 – Mar. 31, 2007
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Apr. 1 – Sep. 30, 2007
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| 2005-07 Prius Tax Credit amount |
$3,150
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$1,575
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$787.50
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You will be required to fill out the Form 8910 (link to IRS form in PDF format) – Alternative Motor Vehicle Credit.
Don’t forget to transfer that line 5 total to your Form 1040.
Thanks for the form, we bought the Prius in April with this incentive in mind. When I didn’t find the credit on the on-line Taxcut program I was worried it was all a big hoax.
Has anyone found this Form 8910 on the H&R Block Taxcut program, by chance?
I just went through the whole thing and don’t see it anywhere. I emailed H&R Block to find out.
Yes, I am having the same problem with Intuit’s TurboTax. It does not let me complete my taxes because, they say, “IRS has not made form 8910 electronically available yet”. Not being a tax pro I cannot tell you what exactly does that mean (IRS has an API?), but they did say that the form is expected to be available on Feb 01, 2007. I’ve signed up for e-mail notifications about the form so I’ll post it here when it will become available for those of you guys that file your taxes electronically
Thanks, that’s more information than I got out of TaxCut. After trading emails for the past 24 hours where they pointed me to many different parts of the program I finally got the answer:
“The form requested, “Form 8910″ is not apart of the web- based program.”
Maybe they will make it available in February. I guess the government’s in no rush to give out the credits.
Chuck
Latest update on availability of the electronic Form 8910, courtesy of Intuit:
“This form is not ready because the taxing agency has not released it. Will be ready 2/16/2007”
I don’t know about you but my 2006 taxes are prepped and ready to go, I am just waiting for this little form to come through. Hope they don’t delay it again.
Perhaps this is too good to be true. See this article from the SF Chronicle about the credit’s relation to the AMT (“Hybrid tax credit bait and switch”):
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2007/01/26/EDGC7N75RT1.DTL
Great find, David!
It is really important to know all the intricacies of the tax law, I agree. Yet I would not agree with the author that it’s almost impossible to avoid AMT. Even my Turbo Tax software provides with tips to avoid AMT and I am sure a tax advisor will be able to do much better than that. Granted, it requires some planning but it seems possible. Additionally, purchase of a hybrid vehicle is not entirely a financial based decision and so I look at the credit as an additional perk, not something I am going to regret about not getting for too long. And, lastly, a family would need to earn rather comfortable $150,000 + /yr to feel impact of AMT on their hybrid vehicle credit and something makes me think they’d be able to afford not to get it.
Latest update:
The Form 8910 is now available electronically so if you have purchased a Prius in 2006, go ahead and finish your taxes now!
I bought a Prius in Aug06. My tax rep tried to input the credit amount on the Alternative Motor Vehicle form and it would not compute it. She called some tax agency and they said we could only get $300.00. I said whoooaa, you gotta be kidding me, after Toyota and Uncle Sam sold these cars based soley on Amercians anticipation of a refund to off set the ridiculously high price for this technology, I was taken back. I’m still waiting word from my accountant.
Hi Manuel,
I feel your frustration. I would not blame the manufacturer for that though. I would say that auto dealerships would be hard pressed to understand all the intricacies of tax law and I think it would be safe to assume that most of them got this tax credit wrong. To be fair, I would have to say that the dealership I bought my Prius from simply said that they are not qualified to talk about it and advised that I make my purchasing decision with this tax credit taken out of consideration.
We had a small discussion here about the above mentioned intricacies (see the link to SF Chronicle article) and it does seem that, based on your income, you may or may not be eligible for the full credit.
I found out too late that I am not entitled to the AMVTC because my child tax credit offsets the AMVTC. Of course, the 8910 was not readily available in April of 2006 when I purchased my Prius, so I had no idea that I was not going to get any credit at all. I’m angry that I paid a higher price for a car, where the price was supposed to be offset by the tax credit. I would have waited until this year to get a lower price if I had known.
I wrote to my congressman to find out why this law says one thing and does another. I feel like we were duped. Here is his response.
“I well appreciate your frustration with your inability to claim the $3150 AMVTC against your federal income taxes due to the amount you claimed under the Child Tax Credit. Please know that my staff has contacted the IRS on your behalf and passed along your concerns…”
He goes on to explain what I already know. I want to know when was the 8910 released to the public? Is anyone else tired of the laws that say one thing and do another?
I’m really incensed about this because I was told by many people (some professionals) that I would receive the full tax credit for purchasing my car. I would have bought it earlier, I had no idea I’d be losing money by waiting until September. I only get to claim it once so I lose out on a lot of money? Is this true? Am I just screwed?
I work with H & R Block. I am also finding that this credit is misleading and not always available when you need it the most. But if you plan ahead, you can maximize your credit. Please contact me (via my website link above) if you need additional help.
Here’s where I go for additional information.
http://www.irs.gov/newsroom/article/0,,id=157557,00.html