Because of some obscure holiday onthe East Coast, Tax day has been
extended from April 15 to April 17 this year. That gives me time to
post this item I keep managing to overlook -- not because it's not a
valid topic, but I guess I have such a mental block against taxes that
I don't want to think about them, and I can't seem to write about them
Consumer Reports posted a very informative item about the 'supposed' tax credits available to buyers of hybrid cars such as the Toyota Prius and Honda Civic (among others). However, many people don't know about the hoops they need to jump through in order to 'qualify' and they aren't aware that the credits are largely dependent on more factors than just the purchase of the vehicle. Consumer Reports addressed these details, saying "Tax credits of up to $3,150 promised a dollar-for-dollar reduction in federal income-tax liability, though many consumers may now find themselves--or their vehicles--ineligible. The devil is in the details, and they can hit you on two fronts:
The credits are gradually phasing out for the most popular models.
People who are subject to the Alternative Minimum Tax (AMT) can't claim the credit at all."
Author Gordon Hard finishes his article saying "If you're considering a hybrid or some other alternative-fuel vehicle because the federal tax credit makes it look financially appealing, you could be disappointed. And you may not know the real out-of-pocket cost until it's too late, perhaps months after a purchase when you (or your tax preparer) can fully access your annual tax liability. The lesson here is to consult your accountant to confirm your eligibility for a federal tax incentive."
So, if you're still fighting with your own tax returns, and wondering about whether you qualify for a credit for your purchase of a hybrid vehicle, check out the complete article on "Hybrid cars and the vanishing tax credit."
by Brandy Schaffels
Ask Patty Contributing Editor and Income Tax Procrastinator