LARS, your posting cause an alarm for me. So I just gone through an IRS 1040 with an account friend, and we think in the example you use, one will get a $3000 refund check, IF he has $3000 or more in tax withheld.

Here is a 1040 form (sorry for a long posting, but hope to clear the air, and alleviate some buyers remorse)

http://www.irs.gov/pub/irs-pdf/f1040.pdf

Page 1 of 1040, pretty simple, you sum up all your income.
On page 2 of 1040.
Line 43: Your taxable income (total income minus std/itemized deductions)
Line 44: Your tax (without taking into account your tax credits/withhelds)
Line 45: Your Alternative Minimum Tax.
Line 46: Line 44+ Line 45
Line 47-55: Your tax credits (hybrid tax credit goes on line 55)
Line 56: Sum of Line 47 to 55
Line 57: Your tax (after deducting tax credits, but still not taking into account your tax withheld)

What IRS is saying is, if your total tax credits (line 56) exceeds your tax (Line 44), the government will not owe you any money. For example, if you are a retiree, your tax is $ 150, and you got a Prius with $3150 tax credit, your tax is not -$3000 (the government does not owe you $ 3000).

And you must apply other forms of tax credits (child, etc.), before applying the hybrid credits against your tax obligations.

But keep going down the form.

Line 58-62: Other taxes (mainly for self-employed or biz owners)
Line 63: Sum of Line 58-62, plus Line 57. This is your total tax.

Line 64: Your withheld (on W-2). This is the money government already taken from you, directly from paycheck.
Line 65-70: Other tax prepayments (such as tax refunds from past years)
Line 71: Sum of Line 64-70. This is the amount of taxes you already paid, either from payroll deduction/tax withheld, or other forms of pre-payments.

LINE 72: Amount you over paid, Line 71 minus Line 63.
Line 73: Refunds (for most of us it is same as line 72)

Since most of us have tax withheld greater than the hybrid tax credit ($3150), we should still see most of it (if not all of it). Here is an example working man.

Line 43 (taxable income): $ 50K (your income - all the deductions)
Line 44 (tax, assuming 25% bracket): $ 12.5K
Line 45 (AMT): None
Line 56 (total Tax credits): $ 3150 (you bought a Prius, no kids, etc.)
Line 57: $ 12.5K - $ 3.15K = $ 9.35K (tax minus tax credits)
Line 58-62, (self-employed taxes): None
Line 63 (Total tax, sum Line 57 to 62): $ 9.35K

Line 64 (tax withheld, from payroll deduction): $ 14 K (you already paid)
Line 65-70 (other tax prepayment): None
Line 71: $ 14K + none = $ 14K (you already paid government this)

Line 72 (so amount you over paid): $ 14K - 9.35K = $ 4.65K
Line 73 (refund you want): $ 4,650

You will get your Hybrid tax credit back, as long as you have enough tax withheld (from paychecks) to cover the tax credits, plus whatever refunds you should get with your mortgage interests, dependents, etc..

For that retiree, his tax is 0 ($ 150 tax - $ 3150 tax credit = $ 0 tax), so depending on his withheld, he will get all his withheld back too. But remember, that $ 3150 goes against his tax (of $ 150), does not add to his withheld.

So for most of us working stiffs (working for someone), and have money sucked out by government every paycheck, we should all probably see something back, including parts (if not all) of the hybrid tax credits.

LARS thanks for highlighting this issue for me. I would have never gone through a 1040 this carefully if it wasn't for your posting. Thanks.

And hope my explaination helps.