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Tax Credit Confusion

  #11  
Old 03-30-2007, 11:41 AM
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Default Re: Tax Credit Confusion

Originally Posted by SoopahMan View Post
I'm not naive to how taxes work - but since nearly half of the tax money I pay goes to the military in some form, the more of my own money I keep from the government the less I pay for the war. This can't be said for something like farm subsidies because they're a miniscule part of the budget.
In reality about 20% of Federal spending goes to the military and only a portion of that goes, say 1/3, to Iraq & Afganistan. Current military spending equates to around 4% of the GDP, slightly higher than the record low of 3% in year 2000 - way below the 50 year average of nearly 6%.

Our freedom isn't free but it's not that expensive either.
 
  #12  
Old 03-30-2007, 03:54 PM
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I won't get into a huge debate but basically you're assuming that only the initial budget figures go to war - if you consider all the Emergency Spending bills appended afterwards and money appropriated for other things (like social security money used instead to pay soldier's bank fees and medical costs) it's a great deal more - nearly 50%. I don't want to drag this thread further off-topic so if you doubt the above, do some googling.
 
  #13  
Old 04-01-2007, 03:04 PM
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Default Re: Tax Credit Confusion

I think this is my second posting on this matter. Don't know where my first went.

I do not pretend to know anything about income taxes. I have been using the same person (and his father before him) to do my taxes. However, I knew before I bought my Prius in Feb that the max credit was not forever.

The tax credit decreases based on the number of cars of a particular model are sold. (If I'm wrong about this, please someone, say something).

I bought my '06 Prius in Feb. of '06. As a result, I got the full 3150 credit. By September, the credit decreased for the Prius because of the large number of cars Toyota sold.

If you look at your Form 8910 the amount of the credit is followed by line 4, Phaseout percentage. Mine was 100%. Line 5 is Tentative Credit. Multiplying Line 3 by Line 4 gives you this value. For me, that was 3150.

I think the fault might lie with your dealer if he did not inform you that the Fed Tax Credit worked as I described.

No Bait and Switch. Someone was not well informed.
 

Last edited by centrider; 04-01-2007 at 03:05 PM. Reason: Added paragraph.
  #14  
Old 04-01-2007, 07:00 PM
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Default Re: Tax Credit Confusion

That's true centrider but whatever the credit is can also be decreased depending on what makes up your taxable income; because if the credit gets you below what the AMT would charge you, you get charged the AMT instead, effectively reducing how much of your credit you're actually enjoying. So there's really 2 things vying for the opportunity to trouble your taxes... although part of the reason this is even an issue is that $3150 is a huge tax credit - most credits out there are much smaller and so don't bump up against the AMT. As the Hybrid credit diminishes the AMT issue will fade away (though the issue for the general public will continue to grow with inflation).
 
  #15  
Old 04-01-2007, 10:02 PM
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Default Re: Tax Credit Confusion

Well, I haven't a clue as to where (or what income) would the AMT kick in. I guess, in checking the relevant form, my AMT zeroed out. So, not having passed into high roller territory, I guess I lucked in (or out). No AMT - and bought my Prius in Feb., when demand was low I got the credit - all 3150.

Out here, some dealers were demanding almost that much over sticker.

How, by the way, do you get that nifty little banner in the lower left corner of your posting? "GREENHYBRID.com. . . "

Thanks for the info.
 
  #16  
Old 04-02-2007, 03:59 AM
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Default Re: Tax Credit Confusion

Also, some people like me didn't pay as many taxes in the first place. Some of us are college students who don't ahve a high income. You can only recieve back as much tax as you payed in the first place.
 
  #17  
Old 04-02-2007, 07:37 AM
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Default Re: Tax Credit Confusion

Originally Posted by centrider View Post
Well, I haven't a clue as to where (or what income) would the AMT kick in. I guess, in checking the relevant form, my AMT zeroed out...
About 85% of the AMT revenue comes from the loss of one's state & local tax deductions(68%) and the personal exemptions(18%). It's starts to kick in at about $75,000. So if you live in a democratic high tax state with kids, maybe a house and make over $75K. I would seriously revisit that AMT form before it becomes a problem.
 
  #18  
Old 04-02-2007, 02:36 PM
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Default Re: Tax Credit Confusion

I certainly was north of that, and of course Calif is definitely a blue state whose taxes it seems pay for a lot of services not available in other states.

Since I don't do my own taxes, (and haven't since the 1980's), I'll allow that my accountant knows better than I why I didn't pay the AMT. In fact, I'm getting a refund from the Feds (not the state, but after all. . .those services).
 

Last edited by centrider; 04-02-2007 at 02:38 PM. Reason: revised sentence
  #19  
Old 04-02-2007, 05:22 PM
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Default Re: Tax Credit Confusion

Originally Posted by centrider View Post
I guess, in checking the relevant form, my AMT zeroed out.
Just to be clear, the AMT should be either 0, or all the tax you're paying; it's an alternative tax model, so either you pay taxes under the regular model or, if the AMT model would charge you more, you pay the AMT instead. If the AMT came up as 0 that means you paid more under the normal model than you would have under the AMT model, not that you had no taxable income under the AMT model.

I'm not an accountant, but I keep track of tax laws so I can put my money where it belongs.

Also, you can make a lot less than $75000 and get hit by the AMT if you have a tax credit coming your way that's over $3000. Hybrid buyers getting such a large credit are in a unique category; before entering my investments but after entering $55k of my income, the AMT kicked in for me. After entering my investments, the AMT was below my normal tax.
 
  #20  
Old 04-02-2007, 07:41 PM
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Default Re: Tax Credit Confusion

Well, soopahman, let's see. . .
 

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