I'd imagine so, but you should check with an accountant.
My aunt reimburses herself, from her business. Her Prius gets high enough fuel economy where the mileage reimbursement pays her enough to cover her car and gas payments.
Will individuals that qualify for the 2006 tax credit for buying a hybrid also be able to deduct their mileage that is for business use?
The credit is claimed on form 8910. On that form they ask what percentage the automobile is used for business purposes and the deduction is reduced by that percentage. They also list an exception for S corporations and partnerships, but I don't know what the exception is.
So if I normally claim 25,000 miles for business use which is now an $11,000 deduction, but that is 70% of my total usage. I still get the $11K deduction, but I only qualify for 30% of the credit?
So if I normally claim 25,000 miles for business use which is now an $11,000 deduction, but that is 70% of my total usage. I still get the $11K deduction, but I only qualify for 30% of the credit?
I'm not sure where the $11,000 came from. Is that 25,000 miles times the per mile deduction? If it is then that's the way I read it. You lose 70% of your deduction, but look at the bright side. The per mile deduction for business expenses is based on the average vehicle mileage. You're going through a lot less gas than an average car, so your business deduction is larger than your actual expenses.
You read it correctly. So my deduction gets reduced, not my credit?
No. I'm thinking it's the other way around. If 25,000 miles is for business you get the same $11,000 deduction for business expenses that you'd get for any car. However, since that 25,000 miles is 70% of your total use of the car you lose 70% of your tax credit for purchasing a hybrid.
I don't know whether you have another car, but I'm thinking you really put 25,000 miles on your other car for business purposes and used your hybrid 100% for personal use (and hence keep your full hybrid credit).
Of course there may also be a business credit for a hybrid, but I don't know of it.
The credit is claimed on form 8910. On that form they ask what percentage the automobile is used for business purposes and the deduction is reduced by that percentage.
Wait a minute here. The only version of that form that is available now is the 2005 form, and the hybrid income tax credit under discussion here was not even available in 2005. I think Orcrone must be looking at provisions for handing the hybrid income tax deduction that was available in 2005. Everybody risks becoming badly misinformed so far in this message thread. My recommendation is to do what foo monkey suggested: See a tax accountant. Or wait for the 2006 Form 8910 (or other form designed by the IRS for handling this credit) to become available.
Wait a minute here. The only version of that form that is available now is the 2005 form, and the hybrid income tax credit under discussion here was not even available in 2005. I think Orcrone must be looking at provisions for handing the hybrid income tax deduction that was available in 2005. Everybody risks becoming badly misinformed so far in this message thread. My recommendation is to do what foo monkey suggested: See a tax accountant. Or wait for the 2006 Form 8910 (or other form designed by the IRS for handling this credit) to become available.
Thank you for looking out for everyone and assuming I don't know what I'm talking about. You could have looked up the form (it's on the IRS web site). Here is a link to a detailed description of the requirements for the tax credit. On the page is a link to form 8910. Line 2 of the form says:
"Enter date during 2006 vehicle was placed in service (MM/DD)" It goes on to compute the tax credit the taxpayer is eligible to receive based on among other things if and when the 60,000th vehicle was sold.
So obviously the form is the current one for the tax credit, not the one for 2005 for the tax deduction.
Hybrid tax question
