From what I gather the Tax Credit is similar to say the Child Credit (1k/kid for 2006). So if I play with my w2, can I increase the ammount I'll get back from my Hybrid purchase?

For 2006 we had an income of 53k, -4 people & std deductions left me with a taxable income of 30k wich equals $3704 of taxes due. -$2k for child credits = 1704 tax due. I assume this is the ammount of the $3k hybrid credit I would recieve.
Togather we paid $6k in taxes so we got a refund of $4k.

If I have less withheld in my W2, will I get more Hybrid cedit, or will I just have more money in my pocket each month & less refund next year?

Thanks!

 

As I understand it, altering your withholding will not affect how much hybrid credit you'll get. It's based on your Alternative Minimum Tax determination, even if you do not need to pay AMT. The hybrid credit comes off after all other credits, so the child credit would likely reduce your hybrid credit (the $2k would come off the $3k credit). However, I'd say talk to a friend who's an accountant to make sure you can maximize your credits and deductions.

 

Changing your withholding will have absolutely no impact on the credit.

 

It will have no impact on the credit, but if you do not owe enough taxes, you won't get the full credit. Since I'm single and not a homeowner (aka lots of deductions) the AMT didn't affect me and I got the full credit. However, since I only have to write a small check to the feds every year, I had to change my W2 so I would have had to pay a lot more in taxes (approximately $2100 more ) Then the full credit comes along and knocks that down back.

Just remember to change your W2 at the end of the year.

 

I believe that you are mistaken. The credit has nothing to do with how much you've paid over the course of the year or how much you "owe" come April. It is only relative to your entire tax liability and the AMT. Say you make $100,000/yr and are responisble for paying $27,000 for the year. Now say your vehicle qualifies for a $2500 Hybrid credit, your tax liability is then reduced to $24,500 for the year (assuming AMT doesn't apply to you). If you've paid $30,000 through withholdings, the feds will refund you $5,500. If you paid $22,000 through withholdings, you will owe $2,500 April 15th. When the instructions talk about "unused portion of the credit" they are referring to people who run into the AMT limits and can't take the full credit.

That said, playing with your withholding status on your W2 will do nothing to determine the amount of credit you can take.

I'm not a CPA, but I've read enough about this....after not being eligible for "my" $1950 credit....to be pretty sure. If you want a certain answer talk to an accountant.

 

Not to quibble over a point, but you can't change your Form W-2 period. You don't generate a W-2; your employer does. Perhaps you meant changing your withholding allowances (which is what determines how much is withheld each paycheck). That is done via Form W-4. And, no, even changing that form will have absolutely no impact on your hybrid credit. If you change your W-4, and do so for reasons that are not allowed via the instructions, you can be fined $500 for submitting a "frivolous" Form W-4.

 

I meant W-4, but since you recieve W-2's in the mail, I remembered that # first

I changed mine years ago to withhold a lot from my check, when I was in self-business, as I owed a few grand each year. Since I have stopped doint that I never went back and re-adjusted. So the short answer is I will get more in my paycheck by adjusting my W4, less in April, and will not affect my Hybrid credit at all.
I now see it seems to be tied to income, income = tax due, nothing to do with tax withheld.

 

Let me put it this way: the feds will not write you a check if you owe them nothing on April 15th before applying the hybrid tax credit.

 

Maybe I'm misunderstanding you, but consider this example. Your federal tax liability is $5,000 before your hybrid credit. You are eligible for a $2,000 hybrid credit on your federal taxes. You had $5,000 withheld from your paychecks throughout the year. So, you owe them nothing before applying the hybrid tax credit. However, you do apply the $2,000 hybrid tax credit. This is very simple now. The IRS will be sending you a refund check for $2,000.

 

I am a single soon-to-be homeowner (depending on the stupid market). I have done my rough calculations. I was laid off at the beginning of the year, triggering pay out of my vacation which is taxed as a bonus. In my new job, I am claiming 2 allowances because the amount of money withheld from my vacation pay out pretty much covers half my tax responsibility. Between that, my education loan interest allowance and the tax credit, I should get my full credit and then some as a refund. Who thought losing one's job had advantages?