Timing of Tax Credit for 2007
 

I ordered a 2WD FEH last week and was told it would likely be delivered in January. So, I'm thinking that I will pay for the vehicle in late December, in order to claim the $3,000 credit on my 2007 return.

In discussing this with my dealer, they say that regardless of my paying for in 2007, I can't claim it as a 2007 credit, as the delivery date, not the payment date, determines the "purchase".

I don't think that's correct. Advice is appreciated.

Re: Timing of Tax Credit for 2007
 

You might want to also post your question in the "Government & Taxes" forum here:
https://www.greenhybrid.com/discuss/f57/
I see other tax credit questions there and it might get more visibility.

Re: Timing of Tax Credit for 2007
 

Thanks, econoline,

I've just done that.

Re: Timing of Tax Credit for 2007
 

IRS says:

"The placed in service date determines the taxable year in which the credit may be claimed."

This was the case back when it was a deduction and it continues today. You have to take delivery by 12/31.

Incidentally, my state (Colorado) has a state tax credit that works similarly. As I file "Single", no kids, no other credits and earn less than $70K per year, I'm eligible for the full Fed credit and an additional amount on my State taxes. I don't think Colorado has published the 2008s yet, but for a 2007 FEH (either model) it was $1972.

That's $4000 or so, which really softens the blow of buying a $28K vehicle. I would not have bought it without it.

Re: Timing of Tax Credit for 2007
 

If you get audited, you will need to produce the documents to prove you had it on the road before 12/31/2007, and I assume that includes title and registration.

As with any income tax rule, it is always "in case you get audited" since you have to submit few supporting documents actually with your return.

Now for my state rebate, I had to submit a copy of the title or the official request-for-title. And I assume that the state has easy access to the DMV records if there is any hint of a need to double check.

Re: Timing of Tax Credit for 2007
 

That's true. I remember the Colorado instructions said I had to attach a copy of the buyer's order for my '04 Prius to the '03 credit form. I got it in November 2003. Agencies generally specify what documents constitute proof. The actual IRS rule says you must physically take delivery from the dealer before EOY. As in actually driving it out of their driveway. But of course people often fudge that.

My neighbor bought a 2007 FEH in 2006 but delayed delivery until January '07 because he'd done upgrades to his home in 2006 that were eligible for energy credits. They don't have kids, but they both work and he was concerned he might get hit with the AMT due to too many credits. So he took the solar credits for '06 and is claiming hybrid credit for '07. I think was a smart move to plan ahead.