Beware future hybrid buyers. This supposed federal tax credit is not as rosy as they mislead so many of us to believe!
If you have children and sufficient mortgage interest deductions, it is possible that you may NOT receive ANY tax credit for the purchase of the vehicle! Specifically this issue affects people who do not owe federal tax.
In our case, we are eligible to receive a refund in excess of the tax we paid due to additional child tax credits, as such, the hybrid credit is simply eliminated from the calculation.
Now while we have little room to complain about our actual federal tax obligation, we still feel robbed out of $1450 for the Escape Hybrid we purchased last year. Granted, it's money we never paid into the system, but it's a credit we counted on getting applied before our additional child tax credit would apply, reducing our potential refund by the $1450 tax that remained before the additional child tax credit was applied.
While we are still eligible for a state credit of $1500 that can be rolled over through 5 tax years, knowing this beforehand would have affected our decision to buy the hybrid that we did. It would have shifted our consideration toward a used vehicle to reduce depreciation since we have many other ways to take advantage of the state credit.
We feel ripped off.
I know that it was probably published somewhere in the credit publication how this would apply, but obviously it was obscure.
Essentially this robbing us of our credit means that the average middle class family with 2+ kids and a mortgage will never be eligible to receive the credit! Chalk another one up to Bush's war on the middle class!
