Tax Credit Clarification Needed

[DaveEV]

And yes, I do regret coming back here, but I will explain why I did.

Blow it off - it's just teh intarweb! Misunderstandings/communications get blown out of proportion all the time.

 

[Clippy]

And maybe Clippy too, since I don't know what the "out smug you" is all about.

So I endorse your idea, give you some information about my experience with both the Prius tax credit and the possible implications to the Leaf, suggest you may be correct about the tenor of this place and you think I'm raggin' you?

Welcome to the forum, Clippy.

 

[sub3marathonman]

And maybe Clippy too, since I don't know what the "out smug you" is all about.

So I endorse your idea, give you some information about my experience with both the Prius tax credit and the possible implications to the Leaf, suggest you may be correct about the tenor of this place and you think I'm raggin' you?

Welcome to the forum, Clippy.

You know, I completely missed that you didn't get the full refund either. And I started reading other's posts (including Clippy's) in a negative light too. I guess when I'm upset that can happen. And yes, it really shouldn't, but this really did. I think it was even more so because it was so fast.

But thanks for the clarification and the welcome.

 

[sub3marathonman]

Mods, maybe a sticky for the topic "Tax credits and rebates" under Newcomers or Buying/Leasing/Dealers?

Just something straightforward for new members detailing the requirements to get the full $7500, that the tax credit is not limited by the AMT, the lack of refundability, that lease rates include the full $7500 buydown by Nissan, that the EVSE tax credit is limited by the AMT, and that rebates such as the California $5000 are not tax credits and are limited to funds available.

Just a thought triggered by this thread.

That refreshed my memory.

It was always stated that if you don't owe the Alternative Minimum Tax (AMT) you would get the rebate for the Prius. Once the final rules were there it turned out you still needed to calculate your "Tentative Minimum Tax," which prevented me from getting the rebate on the 2005 Prius several years ago, even though I owed $0 in AMT. So maybe in the years since this "Tentative Minimum Tax" provision has been dropped. That's what I was trying to figure out.

And since there really isn't any information I can add to the group, since this is a completely new subject for me, all I was really trying to add was to prevent somebody from missing out on a rebate they might need. Here in Florida many, many people have gotten ripped off because the state refuses to live up to their obligations with the Solar Rebate Program.

 

[Boomer23]

Mods, maybe a sticky for the topic "Tax credits and rebates" under Newcomers or Buying/Leasing/Dealers?

.

That refreshed my memory.

It was always stated that if you don't owe the Alternative Minimum Tax (AMT) you would get the rebate for the Prius. Once the final rules were there it turned out you still needed to calculate your "Tentative Minimum Tax," which prevented me from getting the rebate on the 2005 Prius several years ago, even though I owed $0 in AMT. So maybe in the years since this "Tentative Minimum Tax" provision has been dropped. That's what I was trying to figure out.

Hi sub... and please let me add my welcome.

I'm not even close to being a tax pro, but in my limited experience with the AMT, I think that the process of calculating the AMT that you owe always involves calculating your TMT. So I don't think that anything has changed with the calculations.

I had a similar experience to yours. I would have been eligible for a few hundred dollars tax credit for my 2007 Prius purchase but since I had a $2000 credit for installing solar PV panels that year, I couldn't take the Prius credit. Note that I never paid AMT for that year, but the calculation for the TMT included the solar credit and it meant that I couldn't take the Prius credit.

Also note that I don't think that our fabulously productive and non-partisan Congress has yet passed the AMT "patch" for this year that will prevent millions more taxpayers from joining the AMT rolls for their 2010 taxes. Without the patch, the AMT exclusion amounts drop back to the same dollars at which they were set many years ago, because AMT was never indexed for inflation.

Watch the news for that juicy item and talk with your tax guy before counting on the EVSE tax credit. Even if you never paid AMT before, it could bite you this year, especially if you have a home mortgage, property taxes and you live in CA or other high tax state.

 

[mgoleta]

For the specifics try the following links. You may want to talk to a tax professional if you need help interpreting the rules and procedures.

Link to IRS website regarding tax credit for EVs.
http://www.irs.gov/businesses/article/0,,id=214841,00.html
The LEAF qualifies under IRC 30D.
It is reported on form 8834
http://www.irs.gov/pub/irs-pdf/f8834.pdf

or
Go to http://www.fueleconomy.gov/feg/taxevb.shtml
Click on "claiming the credit" for more information

 

[DaveinOlyWA]

first of all; welcome to the forum.

2nd of all; dont be so sensitive. what mwalsh said was valid. whether he said it in a "politically correct" way or not is discussion i will leave to you all because it will accomplish nothing. now, i also wonder why you would think that an issue involving $7500 would not have beened hashed and rehashed SEVERAL times. right now there is a half dozen related topics on it now.

ok, all that out of the way...let me relay what i remember.

i have bought 3 Priuses all of which received some sort of government perk.

on my 2004; it qualified for a credit that amounted to around $1000-1500 depending, and the way it worked is it was a deduction from AGI of $2000 or 2200 one or the other. it was like reporting interest on a savings account except that it reduced your income instead of added to it (adjusted gross income) what it did was reduced your taxable income. iow, you pay taxes on 30,000 instead of 32,000 for example

on my 2006; that is when they provided a tax credit and is most likely what you received. it STARTED at $3150 for the first X sold... around 150,000 i think (dont quote me here). as soon as 150,000 were sold, the next Quarter, the credit was reduced each subsequent quarterd eventually going to zero. the last day that you could buy a Prius and qualify for the full $3150 discount was Sept 30, 2006. (i bought mine Sept 22nd)

now that was a tax credit. iow, it was a 100% deduction off your tax liability. so if your tax bill was $4000, you paid...wait, make that $4150, you paid $1000 and got the rest back. but there was an income limitation for people who made the big bucks. AMT u can fill in the blanks on this.

on my 2010; i did not get kickbacks from the feds, but still made out by $6000. i got in on the intro and got a discount along with a state sales tax credit. my car list was $31,599. my out the door price after dealer prep, delivery, etc. was 28,074.

**edit**

to clarify. the 2004 was a tax deduction. the 2006 was a tax credit to be deducted from your tax liability. iow, if you paid less than 3150 you could not take the full amount.

now i always found this to be counter intuitive to reason it was offered. it was supposed to reduce the TCO, but only upper middle income people would qualify for the entire deduction.

 

[sub3marathonman]

first of all; welcome to the forum.

2nd of all; dont be so sensitive. what mwalsh said was valid. whether he said it in a "politically correct" way or not is discussion i will leave to you all because it will accomplish nothing. now, i also wonder why you would think that an issue involving $7500 would not have beened hashed and rehashed SEVERAL times. right now there is a half dozen related topics on it now.

As a reader of DaveinOlyWA's posts over in PriusChat, I do appreciate his input.

I would think that DaveinOlyWA would agree that there are many, many incredibly basic questions asked in PriusChat, and I don't recall such answers as mwalsh's. I did say it was my first post here. And I suppose I would be guilty of being too casual, and not spending whatever amount of time it would take and finding the answers myself, but I thought there would be an answer already posted here and easily found. And yes, I completely agree, I thought this $7500 tax credit would be a major discussion. And yet, I could only find two, one of which was never answered: http://www.mynissanleaf.com/viewtopic.php?f=23&t=1576 , although it only applies to people in California, and another which just said a person should have posted in the tax credit thread but didn't say where it was. I said immediately too in my first post that I thought there would be a special section just for these questions, as there is in PriusChat. And, from what I was reading, it sounded like people were taking the tax credit as a guaranteed $7500, so I didn't want people to make the same mistake as I did.

So no, I can't find those half-dozen threads on it, and I didn't have success with the search feature when I tried that. But with the input and help from the people here, I think I'm understanding the current situation. I think just having the link to the IRS form 8834 is a major help too.

 

[JPVLeaf]

And, from what I was reading, it sounded like people were taking the tax credit as a guaranteed $7500, so I didn't want people to make the same mistake as I did.

So no, I can't find those half-dozen threads on it, and I didn't have success with the search feature when I tried that. But with the input and help from the people here, I think I'm understanding the current situation. I think just having the link to the IRS form 8834 is a major help too.

Did you try this?

Also, as a tip on your search, try more search words, i.e. "7500 federal tax credit".
It'll still give you a boat load of results, but at least it'll give you something to wade through.

As I mentioned, doing so, you can find this:

http://www.mynissanleaf.com/viewtopic.php?f=4&t=283

In this thread, and I'm sure in later ones, it is stated more than once that the $7.5k ftc is not guaranteed.

 

[EVDRIVER]

Since this is not a tax forum and I wanted accurate details on both CA and Fed I went to the respective sites to get my answers. Besides I would not get tax answers from a Leaf forum when a large percentage of info is inaccurate or applies to other individuals tax situations. One can also call the IRS or the state and get a more accurate answer. I did both, in fact when I want a valid answer I go to the source of the info not a third party when it is important. People that need important tax answers should seek professional advice, even most of the EV info here is wrong the first few times around.

The reason information is difficult to find there is because there are many redundant threads started when they can be placed in an existing thread. Every announcement seems to end up a new thread, and then drifts off into the same discussion. For instance this does not need a thread but now it will end up starting a new discussion on tax credits where new members will ask about AMT rather than see what was posted here. This forum seems to be "thread happy" compared to other forums I have moderated.

http://www.mynissanleaf.com/viewtopic.php?f=4&t=1681


If members stick to key forums they will remain active and new members will not be so lost and start new threads. I'm sure we will have many new tax credit forums to come.

 

[mgoleta]

EVDRIVER is correct. This is not a tax forum. The IRS is the place to get information about fedral tax information. Most of the time in these forums I would have found a few helpful links to be the most useful rather than opions about what it should be.

IRS Tax Tip 2010-66 item 6 talks about how the EV credit relates to AMT.

http://www.irs.gov/newsroom/article/0,,id=220989,00.html

 

[planet4ever]

IRS Tax Tip 2010-66 item 6 talks about how the EV credit relates to AMT.

http://www.irs.gov/newsroom/article/0,,id=220989,00.html

Umm, not really. That talks about how the Alternative Motor Vehicle Credit relates to AMT. That credit applies to hybrids, fuel cell vehicles, etc. and is reported on Form 8910. BEVs like the LEAF are covered by the Plug-in Electric Drive Vehicle Credit which is reported on Form 8936.

 

[EVDRIVER]

Anyone can call the IRS and speak to a tax specialist in the particular area of interest. I did it once and it was quick and easy.

 

[garygid]

sub3...,
Welcome to the LEAF forum.

Although the $7500 tax credit has been much discussed here, you brought NEW information, and a considerate, thoughtful warning to us, that: the rules can change, and that can be difficult or impossible to detect before it is too late. Thanks.

Some people occasionally write seemingly abrupt or harsh responses, but often (not always) there is something worth considering in whatever they are trying (possibly poorly) to express.

Doing our part as readers, it is best to try to be less affected by others "lack of diplomacy", let the reaction pass before posting again, and continue to try to be helpful.

Again, Welcome here.

 

[mgoleta]

I have gotten two answers for what IRS forms are applicable, 8834 and 8936. I have gotten both of these answers from more than one gov agency including the IRS. The fine tooth comb read of the regs suggest the following (apparently when you are talking to someone of the phone, you get the first answer they see):

applies to IRC 30D
Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit
www.irs.gov/pub/irs-pdf/f8936.pdf

applies to IRC 30
Form 8834, Qualified Plug-in Electric and Electric Vehicle Credit
www.irs.gov/pub/irs-pdf/f8834.pdf

The LEAF qualifies under IDC 30D
http://www.irs.gov/businesses/article/0,,id=230506,00.html

These forms are straight forward and explain exactly how they integrate in the 1040 form.

If someone has better information or more up to date information please post.

 

[SanDust]

Although the $7500 tax credit has been much discussed here, you brought NEW information, and a considerate, thoughtful warning to us, that: the rules can change, and that can be difficult or impossible to detect before it is too late. Thanks.

Except that the rules DID NOT change. All he's saying is that, while the earlier credits were always subject to the AMT, he didn't figure this out until he filed. So he messed this up. I'm sorry about this but really the Toyota salesperson should have alerted him. Shame on Toyota for not making clear that the credits were subject to the AMT. You don't need to be a tax expert to point this out.

Given that a brief amount of research should show that the credits for the Leaf are not subject to the AMT, I'm not sure what "NEW" information he's brought to the table, other than simply adding to the confusion by suggesting that they somehow are subject to the AMT.

This seems more subtraction than addition, which may be the reason for the frosty reception.

 

[planet4ever]

Given that a brief amount of research should show that the credits for the Leaf are not subject to the AMT, I'm not sure what "NEW" information he's brought to the table, other than simply adding to the confusion by suggesting that they somehow are subject to the AMT.

If by "a brief amount of research" you mean going through Form 6251 (the AMT form) and its instructions with a fine tooth comb, I doubt the research would be brief unless you are a tax attorney. I am not a tax attorney, and I find both the form and its instructions extremely complex and difficult to understand. The only thing I have been able to conclude is that if you are claiming the EV tax credit as part of a business, it probably IS affected by AMT, and otherwise it probably IS NOT. If you have found an authoritative statement, I wish you would provide a reference.

 

[EVDRIVER]

Car dealerships should not be commenting on AMT or tax details in any way, the most they should disclose is that there are credits available and one should "consult their tax professional" for details, This advice is best to anyone that is unsure, if you pay AMT then you likely have a tax preparer and that is the person that should answer questions, a competent tax person should have the tools or resources to get the proper answer for what applies to your particular tax situation. Everyones situation is different, some may even get the credit rolled forward but this is a question that is situation specific.

 

[DaveinOlyWA]

i concur; the tax laws are far too complex and its not Toyota's responsibility to relay that info to you.

 

[garygid]

So, many IRS "rules" appear to be complex, and not easy to apply to specific cases, even when well researched.

Even calling the IRS for advice can get you incorrect information, and apparently you are at fault for following their bad advice unless you have it in writing from them.

I believed it either was, or was not, subject to AMT, not that it "could be" or "might not". So, this warning, no matter the basis, is still helpful, and still, the Congress COULD change the rules in the next weeks.

Folks do not have to get every detail correct to provide well-meaning, and often even helpful, input. We should all appreciate that. And, yes, even I make mistakes, or think about details that others consider obvious or irrelevant (to them).

I choose to believe that "sun3..." had the good intent to be helpful.