IRS Hybrid Rebates and IRS Hybrid Tax Credits


Defined Tag: IRS Hybrid Rebate.
Aside from the obvious reason to own a hybrid car, there are also many hybrid car rebates available.

The following information is the basic rules to comply with the IRS hybrid rebate:

• The vehicle must be placed in service after 12/31/05 and purchased on or before 12/31/10.

• The original use of the vehicle must begin with the taxpayer claiming the credit. The credit may only be claimed by the original owner of a new, qualifying, hybrid vehicle and does not apply to a used hybrid vehicle.

• The vehicle must be acquired for use or lease by the taxpayer claiming the credit. The credit is only available to the original purchaser of a qualifying hybrid vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit. For qualifying vehicles used by a tax-exempt entity, the person who sold the qualifying vehicle to the person or entity using the vehicle is eligible to claim the credit, but only if the seller clearly discloses in a document to the tax-exempt entity the amount of credit.
• The vehicle must be used predominantly within the United States.

• The new tax credit sets a limit of 60,000 hybrids per carmaker. Toyota hit the 60,000 mark in June, 2006. (Honda and Ford are unlikely to reach 60,000 hybrids in 2006.) Buyers have until Sept. 30 to purchase one of the five gasoline-electric hybrid models sold by Toyota and Lexus to qualify for 100 percent of the credit. On Oct. 1, the credit amount listed above will be reduced by half.

• The credit for Toyota hybrids will stay at 50 percent for two quarters, fall to 25 percent in the subsequent two quarters, then expire on Oct. 1, 2007.

• The credit amount is based on the purchase date of the vehicle.

• The new law for the hybrid tax credit might require taxpayers to recapture their hybrid tax credit if they re-sell their hybrid car or truck.

• The credit will not reduce your alternative minimum tax, if that applies to you. As stated in Toyota's statement about the new tax credits: "The benefit of the hybrid vehicle tax credit will also be substantially reduced or eliminated if the individual purchaser is subject to the federal alternative minimum tax."

• The credit will reduce your regular income tax liability, but not below zero.

• If you are eligible for multiple tax credits, the hybrid tax credit is taken last after all the other credits (e.g., child care tax credit, mortgage credit, retirement savings credit) have been taken. Any tax liability left over by these reductions will be the maximum dollar limit of your hybrid tax credit. If your hybrid tax credit exceeds your maximum dollar limit, the excess is not refundable, and is lost forever.

• The excess cannot be carried over to another year, or given away to another person.

© - 2006 Hybrid-Rides.com