Hybrid tax credit bait and switch
 

Everyone needs to write their Senators and Representatives after reading this article in the San Francisco Chronicle. Click here. Bottom line: Most of us are NOT getting the tax credit.

Here is a link where you can email Congress: Click here.

Re: Hybrid tax credit bait and switch
 

Here's another thread on it:
https://www.greenhybrid.com/discuss/...ad.php?t=12060

Re: Hybrid tax credit bait and switch
 

Well, I bought my TCH knowing full well I wouldn't get a penny of the tax credit....I am in the un-enviable (enviable?) position of not having enough taxable income to have a tax obligation this year....(And I paid cash, at MSRP in July, no financing for me)

I bought my loaded TCH on it's merits: great fuel economy, extremely low emissions, very quiet, Toyota reliability, technological wonder, near luxury, and making a statement regarding our nations dependence on the middle east's oil cartel.

8,000+ miles later, averaging 40.3 mpg overall, and couldn't be happier, with or without the mystical tax credit.

But...I truly feel for those who expected the $2600, and may not get it...very typical of our outdated tax code, and our(?) politicians....but that is another topic....

Thanks for the link and the heads up!

Re: Hybrid tax credit bait and switch
 

For me, it was not a bait and switch, I knew going in that I might be hit with the AMT.

Next year I am almost certain I will be hit with the AMT.

Re: Hybrid tax credit bait and switch
 

Guuaaaud - is that bass ackwards, or what? Yuppers, those millionaires need the tax credits way more than I do. Let me kiss your feet, while I'm at it.

But I'm not bitter. We just might be one of the lucky ones this year, who gets $10 back.

Re: Hybrid tax credit bait and switch
 

AG4ever, you KNEW the hybrid credit was tied to the AMT? I ask because in all the reading I did on hybrids, I have never seen this connection made until 2 days ago. I realize anyone ever hit with the AMT does not soon for get it. But it is one thing to know you are going to get bit by the AMT and another to know that your regular tax obligation has to surpass the AMT by $2600 to receive the full credit.

I agree with another point made on this thread. I would the Camry on its merits, regardless of the tax credit. The tax credit made a good decision, a no brainer however.

Re: Hybrid tax credit bait and switch
 

It is simply a matter of credits and deductions. All deductions can put you into the AMT if you have enough of them. Credits get you there faster since your tax liabilty goes down faster with a credit than a deduction. I knew going in that our household income puts us in a perilious position to hit the AMT sooner, and the hybrid credit could do it. From when I did my taxes roughly, I am about $1000 away from the AMT using the standard deduction. That is my gripe, that the two taxes are so darn close that if I had more itemizations (like mortgage interest), I would be in the AMT with little or no help from the hybrid credit.

Everyones gripe should not be with the hybrid credit, but the AMT.

ALL CREDITS WILL CAUSE THE SAME AMT ISSUES, the hybrid credit is not special. Unfortunatly. most people don't research taxes enough to know, they just plunk the money down for turbo tax, and let it do its thing. I prefer to do it manually so I have some control over how the return is filed. There are thousands of correct ways to file your return and do the math, turbo tax just picks the safest. I pick one of the ways that is still legal and benifits me more, much like a good accountant would do.

(I also read a post on one of the forums somewhere that mentioned it, or it might have been an article, while researching the credit in October.)

Re: Hybrid tax credit bait and switch
 

Agreed. The AMT is a real pain. Luckily I don't hit it as I am single and only been working full-time for a year and half so I do not make that much.

However, I use TurboTax as I just simply do not have the time to read all the tax law and knowing my dumb luck I would screw it up and get charged lovely fees from the IRS.

Like ag4ever, I also knew that the credit was tied to the AMT. The tax credit was not a deal maker for me and my purchase. The awesome reliability and performance of Toyota was.

Mike

Re: Hybrid tax credit bait and switch
 

I have never hit AMT or knew anything about it before this article. I am hoping with my household income no child deduction I will be fine.

Re: Hybrid tax credit bait and switch
 

I haven't hit the AMT yet, so I am relieved to know that I will get the full tax credit (confirmed with Turbo Tax). I would not have paid list price in August, if not for the credit. I would have TRIED to wait a few months. I do love my jasper pearl TCH.

JoAnn

Re: Hybrid tax credit bait and switch
 

I am seriously p.o.'d right now. Looks like I am NOT paying the AMT, yet I am still only getting a $650 deduction. That's because I bought a house in early-2006, so my 2006 mortgage interest created a huge deduction, which resulted in a large refund. The fine print of the alternate vehicle tax credit says that it only applies against taxes you owe and reduces your liability to zero, and then you lose any remaining credit once your liability is zero. Not a single Toyota salesperson mentioned this fine print, which is also rubbing me the wrong way.

Unlike most of you other guys, I never would have bought the TCH without this credit. This $2600 credit was THE ONE AND ONLY deciding factor in selecting this particular vehicle, because I actually don't think that the extra money for the hybrid engine is worth it. "Being green" is not a factor for me, it was all about the bottom line. Without the tax credit, it will take me 10 years of increased gas mileage for me to "pay off" the additional cost of the hybrid. I paid MSRP back in August, but even if I really decided a TCH was the best car for my family, I could have waited until the street price dropped after Sept 1, since I'm not getting the full credit anyway.

I'll be writing to my congressman. This is the type of stupidity that will make me to never want to buy another hybrid/clean vehicle again.

Re: Hybrid tax credit bait and switch
 

You can't be serious. You are PO'ed because you have a zero tax liability and you expect the rest of us who owe taxes this year to subsidize your vehicle purchase so that you can actually MAKE money on your vehicle purchase.

If this credit was THE deciding factor, as you state, then you should have done a better job in understanding how the tax credit would impact you.

Re: Hybrid tax credit bait and switch
 

it's funny how people that end up not paying any taxes still find a way to complain about taxes...

Re: Hybrid tax credit bait and switch
 

Yesterday I E-filed and getting $1800 of the $2600 rebate back. I'm retired and don't have earned income anymore. I bought my TOH almost on spur of the moment decision. I didn't plan to buy one, but after at test drive , I ordered it. I would have gotten it without the rebate anyway. The tax rebate is icing on the cake. I've have the car 6 months and love it more each day.

Re: Hybrid tax credit bait and switch
 

When I ordered mine 3 weeks ago I didn't even realize I still qualified for the tax credit. So obviously the tax credit had NOTHING to do with my buying the car.


Flopshot - Just enjoy the car. If the credit issue bothers you that much then sell the car now before it loses even more value and get what you want.

Re: Hybrid tax credit bait and switch
 

I posted a topic on this back on 9*28*2006. The hybrid tax credit is "non-refundable" meaning you cannot use it to increase your income tax refund. I found that out with research of my own in late September when I was evaluating my tax liability for 2006.

What I did (pat on back now) was to reduce the amount of withholding coming out of my pay so that I would "owe" at least $2600 and be able to use the tax credit to cover up the deficit.

It worked great for me. Too bad more people did not know about it in time.

It wasn't a bait and switch at all; it was a non-refundable credit from the start.

Re: Hybrid tax credit bait and switch
 

The question asked in this thread is if you felt like you were a victim of bait and switch. The point of the thread is not to state if you felt someone else was deserving or not deserving of the credit. If you feel I don't deserve the credit, then you should probably also state how everyone else who has to pay AMT should not be complaining, because the sole purpose of the AMT is so people with higher incomes don't find all kinds of tax credits to end up with no liability. Those people are trying to "get around the system" much more than I am. So should I have done a better job of understanding all the implications of the tax credit? Absolutely, this is no-ones fault but my own. But should the IRS page have been crystal clear (which it wasn't) and should Toyota have not pushed a 1-sided story about tax credit on me? 100% absolutely as well, which is why I feel this is a bait&switch. Both of those organizations led me to believe that I would receive the full credit under all circumstances.

Re: Hybrid tax credit bait and switch
 

I think using "bait and switch" is a poor choice in this matter. Bait and switch refers to the action of "baiting" someone with one advertisement then "switching" the item for something different.

In this case, the tax credit never changed. It was "always" non-refundable. There was never a time when it was refundable and then changed to non-refundable.

This information could be found on the web eariler in the year, before I found it in September.

Like I have said before, I think it is and will be in the future a mistake for anyone to buy a hybrid car "just for the tax credit alone." This action to me implies that the buyer does not think the hybrid technology is worth the price they are paying and they are being swayed by tax money to buy something they would not really buy if the item had to stand on it's own merit.

As a hybrid advocate and owner since July 2004, I do not like an attitude like that. If you believe in the technology and want to either save gas or reduce pollution, then buy a hybrid vehicle.

But if you bought ONLY because of the tax break, I think you bought for the wrong reasons and I really can't muster any empathy for your situation. Sorry, but that's my honest take. Nothing personal toward any one individual - I think any and all of the people who bought only for the tax break made a mistake.

Re: Hybrid tax credit bait and switch
 

No, that is incorrect. It has virtually nothing to do with the amount of your tax refund. Your tax refund (or amount owed) is entirely the difference between what your tax bill is and how much of that tax bill you have already paid through withholding. The hybrid tax credit only effects your tax bill and has nothing to do with your withholding. Similarly, the AMT is in no way affected by how much you have withheld.

For example, if your non-AMT without the hybrid credit tax bill is $3000, and your AMT bill is $1500, and your withholding for the year was $3500, then your non-AMT with the $2600 hybrid credit is $3000-2600 = $400. However, since your AMT bill is $1500, you will pay $1500, meaning you only get to use $1500-400 = $1100 of the credit (in other words, the AMT took away all but $400 of the hybrid credit). You will get $3500-1500 = $2000 refund. However, without the AMT, you would have gotten a $3500-400 = $3100 refund. Without any hybrid credit, you would have gotten a $3500-3000 = $500 refund.

When your non-AMT tax bill is at least $2600 greater than your AMT tax, then you will get ALL of the credit, regardless of how much withholding you have. (Unless, you withheld so little that you get fined for too little withholding, in which case the credit will reduce the amount of fine you end up paying!)

-- Alan

Re: Hybrid tax credit bait and switch
 

I beg to differ....:D

If you read the article I posted a link to back in September, it clearly explains that the tax credit is "non-refundable." Which means it cannot EVEN BY ONE DOLLAR increase the CASH REFUND you get from the IRS. Regardless of AMT situation.

In an non-AMT situation, if you end up with all your other tax obligations with a $500 refund, the hybrid tax credit will be lost to you completely.

It will apply only if you OWE taxes - at that point it can reduce the amount you owe by the amount of the credit you receive. If you owe $500 but your tax credit is $2,100, then the other $1600 is lost to you, not refunded to you.

The hybrid tax credit CANNOT increase your refund under any circumstances. Is it "non-refundable" meaning it cannot be re-funded back to you in the form of a refund.

Re: Hybrid tax credit bait and switch
 

You are referring to this link. Please pardon me for being tactless, but you are, plain and simply, WRONG. You do not understand the terms liability, withholding, credit, etc. and how they apply to federal taxes. You misunderstood what you read, and ignored the many clear attempts to correct your misunderstanding. Please stop misleading people on this.

If you still disagree with me, as well as disagree with gumby and TeeSter and ck90211 and chilly and DebbieKatz and leahbeatle and occ, in other words EVERY OTHER POSTER IN YOUR CITED THREAD, then I am afraid this will have to wait until actual refund checks are received and reported by forum members, although at this point I am not confident even that would convince you.

Yes, your obstinacy on this point has frustrated me!

-- Alan

Re: Hybrid tax credit bait and switch
 

I may have to disagree. Let me tell you why. We currently do not own the TCH but will hopefully own one by 3/31 of this year. Anyway, I did our taxes last night using Turbo Tax. This year we are getting a refund. I decided to go back into turbo tax and input all my same information AND included information showing I bought a TCH last year in December (for hypothetical purposes). This means my hybrid credit would be $1300 according to the IRS. Well after finishing my return WITH the hybrid purchase information my refund increased by $1300. That leads me to believe that you can increase your refund by the credit amount. Turbo tax also said I didn't owe any AMT.

The Hybrid tax credit is put on form 1040 on line 55. What line 55 does in decrease your tax liability by that credit amount. So if your tax liability is $5000 and your hybrid credit is $2600 then your net tax liability would be $2400 ($5000-$2600). So when you decrease your tax liability you will increase your refund (or decrease the amount you owe).

Re: Hybrid tax credit bait and switch
 

Alan I believe my previous post was irrefutable. I believe I confirmed exactly what you said in your previous post.:D

Re: Hybrid tax credit bait and switch
 

This has nothing to do with my feelings on if you are deserving of the credit or not.

If I read your post correctly you state that you are not getting the FULL credit because you have ZERO tax liability.

This implies you expect the government to send you a check for the remaining credit even though you did not pay ANY taxes this year. In other words you make money on the purchase of your vehicle. I don't see how anyone can seriously believe that the the government OWES them money when they sent NOTHING to the government this year. This defies logic to me.

Re: Hybrid tax credit bait and switch
 

I'll be honest here - I don't dive to deeply into my taxes and I can't calculate it yet in Turbo Tax until the form is releaseed on or about the 16th...

On my form 6241 - AMT......
Line 33 = Tentative Min Tax = 12,842
Line 34 = Tax from 1040 = 15,956
Line 35 - AMT = 0

Will I get anything or all of it? I'm confused and reading up on AMT only confuses me more!

Re: Hybrid tax credit bait and switch
 

Seems the only thing clear here is the tax code is rediculiously confusing. I was planning on trusting my tax returns to a $30 computer program (I sure hope Walla Walla has cells with nice outside views) and run TurboTax after Feb 16.

Wish me luck.

Re: Hybrid tax credit bait and switch
 

I thought we had lars-ss clear on this at the end of that other "non-refundable" thread.

And once again we are back to him claiming that the credit CANNOT increase the amount of your federal tax refund. Ugh. This is NOT TRUE.

It can absolutely increase your refund if your tax liability is greater than the amount of the credit. Taxes owed on April 15th are not your tax liability, this is the amount is the difference between your tax liability (less tax credits) and the amount of withholding for the year.

Decreasing your withholding will not help the situation - in fact, it might even cost you penalties for underpayment (underwithholding).

Re: Hybrid tax credit bait and switch
 

RC

Just did my taxes with Turbo Tax this morning. The 8910 for the credit is now there, just labeled "Form Not Final - Do Not File". Based on the numbers in your post, you will get the complete credit as your "regular" tax exceeds the tenative minimum tax by more than the amount of the credit (15,956.-12,842=3,114). Thus if you are entitled to a 2,600 credit your tax bill of 15,956 will be reduced by the 2,600, owing 13,356. No matter how much you had withheld. The difference in my return between the regular tax and the tmt was 5,670 on the Form 6251. The 1040 showed me getting the whole 2600 credit on line 55 thus reducing my overall tax bill by that amount.

Re: Hybrid tax credit bait and switch
 

I just did my taxes at TaxCut website.

I owed $2389 before my hybrid tax credit, which I then used to reduce my tax liability to ZERO.

Not BELOW zero.

I lost $211 of the credit, which is NOT REFUNDABLE to me.

That's what I warned people about in September - If you are going to OWE taxes at the end of the year, make sure the amount you are going to OWE is MORE than your hybrid tax credit so that you do not lose some of it.

I almost hit it perfect by reducing my withholding in September. Had I waited longer I would have lost more of it.

Re: Hybrid tax credit bait and switch
 

First of all, where in that interview did you find the section for the hybrid credit? I haven't been able to find it.

Secondly, if you lost $211 of the credit, then you must have had tax credits (including the hybrid credit)/deductions that were nearly equal to the amount of tax liability that you had. If you had NOT changed your withholding in September, you STILL would have lost $211 of your credit. Withholding DOES NOT MATTER in this situation.

The amount that you OWE after calculating your taxes is NOT your tax liability. It is the amount that you must pay to fulfill the part of your tax liability that wasn't covered by your federal withholding.

This is a direct quoted example from the thread you posted in:

Re: Hybrid tax credit bait and switch
 

Well Lars-ss - you are completely wrong!!! I had finished my taxes in Turbo tax except for the car - I updated today and it let me enter it.... Before I entered the vehicle I had a REFUND ALREADY at $1137 - I added the car and guess what - my refund jumped to $2300..... Looks like I only got half for some reason or other..... Strange....

Re: Hybrid tax credit bait and switch
 

Did you get your car before or after September 30?

Re: Hybrid tax credit bait and switch
 

Same here. My refund increased by $1300, as I bought the car on 11/24/06, which was after the date the refund dropped to 50% of $2600, as shown on the form 8910 instructions.

Re: Hybrid tax credit bait and switch
 

Not that it needs to be said (as the only confusion seems to be on lars-ss's part), but using TurboTax my refund changed from $400 to $3000 after applying the hybrid credit (where in my case my tax liability is well in excess of my refund amount).

I'll echo what's been said:
A non-refundable credit can absolutely increase your refund (it just won't ever increase it past the amount of your withholding).

Non-refundable has a very specific meaning when it comes to tax credits, and its not ok to pretend it means "can't contribute to a refund".

Re: Hybrid tax credit bait and switch
 

I got my car on August 30th - so I should have gotten the full - but for some reason didn't....

Re: Hybrid tax credit bait and switch
 

Wow, after catching up on this thread, homey is glad he has an accountant!! :D

Re: Hybrid tax credit bait and switch
 

I just re-read your comments to make sure I wasn't being completely stupid, and I still think I am correct. I think the two of you are making a big assumption about my tax return, which is that I have zero tax liability. I never said this was my situation, although I never made that crystal clear (maybe I should write tax laws! :D ) All I said was that I was getting a huge refund, and I quoted the fine print of the tax credit which says your liability cannot be reduced below zero.

I have a lot of mortgage interest, so that creates a huge deduction on my taxable income. However, after my dedeuctions, I still owe just under $16k in federal taxes on my income before any credits, which is reported on line 46 of my 1040. TurboTax then says I only get $650 in hybrid credit, so my tax liability ends up as $15,296, which is reported on line 63 of my 1040. This is the tax I owe the IRS, so you cannot say that I am not paying taxes this year or that my tax liability is zero. I have withholdings of over $26k (I forgot to change my W-4 after I bought my house) so I am getting a refund of $10k+.

So if my tax liability was ~$16k before credits, why am I not allowed to take the full $2600? I'm going to keep researching and updating my TurboTax software, maybe there is a bug in TurboTax on how it is calculating credits.

Re: Hybrid tax credit bait and switch
 

As a famous golfer once said... "I am such a stupid!" After going over my 8910 very carefully, I finally noticed that I put a purchase and in-service date of Aug 1, 2007. Well, the TCH is only expected to get a 25% credit for that service date, so my credit was cut to $650. DOH! I fixed the date to 8/1/2006, and now I am getting the full $2600 credit.

So many people who have answered me are correct, but I will write two sentences that hopefully make this a bit more clear for others like me:

1) Your pre-credit tax liability (line 46 of your 1040) cannot go below $2600 if you want to receive the full credit, and your total tax liability (line 63) cannot go below $0.

2) If you have more withholdings than tax liability (meaning you get a refund), this has no bearing on your ability to take the tax credit.

Re: Hybrid tax credit bait and switch
 

I'm glad it worked out for you:D

Re: Hybrid tax credit bait and switch
 

nevermind my previous comment, you are paying a bit of tax. You should adjust your withholdings for next year so the feds don't sit on you $10k all year. My goal with my withholdings is to break even at the end of the year.