Sunday, July 6, 2008

Expiration on Hybrid Tax Credit

This past week I wrote on the tax credits receieved through the purchase of a Hybrid car. I wanted to follow up with some new information found in regards to the tax credits!

Clean fuel creditCredits are good because they are a dollar-for-dollar reduction in tax. And if you bought a new hybrid gas-electric auto or truck in 2007, you can get a conservation tax credit of between $250 and $1,000 and an additional fuel economy credit of between $400 and $2,400, depending on the make and the fuel economy. A hybrid car combines an electric motor with a gas fueled internal combustion engine.
But act quickly. The credit starts to phase out when the auto manufacturer sells its 60,000th hybrid vehicle. That's the total per manufacturer, not 60,000 per model. Once the cap is reached, the phaseout starts at the beginning of the second subsequent calendar quarter.

For the next two quarters, you can claim only half the credit. In the six months after that, 25% of the full credit. So, if Honda's cap was reached, say, in August 2006, buyers of Honda's hybrids would get 100% of the credit through Dec. 31, 50% for those purchased in January 2007 through June 2007, and 25% for any bought in the remainder of the year. After that, zero.
You get the deduction in the year you start using the car, and you must be the original owner. Take it on your Form 1040 by writing in "clean fuel."

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