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Discussion Starter · #1 ·
There's confusion on this. It's your tax LIABILITY that counts. You may be "liable" for $6K in taxes, and have had $3K deducted from your checks. So you've already PAID $3K If the credit is $3K, you don't pay any more.

If you're "liable for" $2K, and have had it all deducted from your checks, you get only that $2K back. Uncle Sam will not take the other $1K from its funds and give it to you.
Is this statement true? I usually only pay about $2200 in taxes a year. Does this mean that I'm only going to get a $2200 tax credit from the government?

This doesn't seem right.

Ken
 

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Discussion Starter · #2 ·
I found the exact wording in the Energy Bill:

Personal Credit. – The credit allowed under subsection (a) (after the application of paragraph (1) for any taxable year shall not exceed the excess (if any) of –

(A) The regular tax reduced by the sum of the credits allowable under subpart A and sections 27 and 30, over
(B) The tentative minimum tax for the taxable year.
Can someone explain exactly what this means?

Thanks.

Ken
 

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Yes, it is a reduction in your liability. But your liability includes what you've paid throughout the year in tax withholdings.

So, if you make say $100K, and your tax bracket is 25%, and your standard deduction was 10K, then you would be taxed at 25% on 90K. Of course throughout the year, you would be gradually paying at least most of, if not all of or even over $22.5K in taxes. Lets say you had a withholdings of 23K. Without any credits, you would have $500 coming back to you. With the Prius credit, you would have $3600 coming back to you.

But if you have no or little income, with little or no tax liability, then I believe it would be correct, you couldn't get more credit than your tax. A student or disabled person on SSI would be a poor candidate for the Prius credit, as they would have too small of a tax to get a credit on. But then, they couldn't or shouldn't be able to afford such a vehicle anyway.l
 
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