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FYI, From the news wires:

WASHINGTON - Environmentally concerned car buyers will see some federal tax breaks for energy efficient hybrids start shrinking this fall.

Toyota Motor Corp. has hit the production limit — 60,000 — on vehicles eligible for a special tax credit designed to encourage more buyers to choose gas-electric hybrids.

Spokeswoman Martha Voss said Thursday that the automaker sold its 60,000th such vehicle in May.

That means the tax credits for Toyota and Lexus hybrids will be cut in half for drivers who purchase their vehicles beginning in October, she said. The $3,150 credit for the popular Toyota Prius, the largest hybrid tax credit available, would shrink to $1,575.

Six months later, beginning next April, the tax credits will shrink to one-quarter of their original value. They will disappear by October 2007.

Hybrids account for a very small percentage of the market, but they have grown in popularity with gas prices topping $3 a gallon.

Taxpayers could still claim a full tax credit for purchasing hybrids made by other manufacturers, such as Honda Motor Co., Ford Motor Co. and General Motors Corp., until those manufacturers trigger the credit limits or the tax break expires in 2011.

Tax credits for hybrids range from $250 to $2,600, depending on the make and model of vehicle. A credit reduces taxes dollar-for-dollar.

The tax break, part of a mammoth energy plan enacted last summer and designed to promote cleaner energy and more conservation, lets buyers claim a credit worth up to $3,400 for purchasing new hybrids.

But the law limited that tax credit to the first 60,000 vehicles that a manufacturer produces. After the manufacturer hits that limit, the full credit is available only through the next quarter. The credit then shrinks to half its value for six months, and then to one-quarter for another six months, before disappearing entirely.

Toyota hybrid sales have outpaced other hybrid manufacturers. The IRS, which tracks hybrid production for taxpayers, certified that Toyota sold 41,779 hybrids from January through March this year. During the same period, Honda sold 9,072 hybrids and Ford sold 6,192.

President Bush asked Congress to make all hybrid vehicles sold this year eligible for the tax break, one element of a proposal to reduce oil and gas consumption. It was not clear if Congress would act on that this year.
 

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Tax Credit Information

:lol: I was also confused by the information I read online about the tax credit. I spoke with a tax attorney I know and followed up with the IRS. According to the IRS as long as you take delivery on or before September 30, 2006, you're in good shape with the full $3,150 tax credit. Ignore what you read, even on the IRS website, because it is confusing. Don't worry about the 60,000 vehicle issue, since the IRS doesn't. Go for the full amount. If you are not sure, you may also contact the IRS, a tax attorney, or tax preparer. Good luck!
 

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The reason a date can now be given is because Toyota reached their 60K mark. If they hadn't yet, we couldn't give you a date, but we could give you potential dates, as they would fall on calendar year quarter boundaries.
 

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Tax Credit

Yes, go to this link: http://www.irs.gov/newsroom/article/0,, ... 32,00.html

It will give you all the information and leads that you will need to take the deduction.

Also, go to this link. I believe this form may still be a "draft," but the final product should be similar.

http://www.irs.gov/pub/irs-pdf/f8910.pdf

Good luck! I'm telling friends and family to find a Prius before 9/30/2006 so they, too, can get a little back from Uncle Sam! Say, "Uncle!"
 

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In summary, the IRS publication says that you fill out form 8910 and enter information on the proper line of the 1040. The 8910 form out there is still for the 2005 return. I assume that they will post the new one at the beginning of 2007.

Thanks.
 

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Also note that even the 1/4 credit will (for most of the population) give you more of a tax break than the pre-2006 deduction would have given you. (Since it comes directly off tax paid, rather than 'taxable income'.)

Unfortunately, unless my business really grows more than I had been planning this year, there's no way we'll be getting a new car before the Toyota credit goes away altogether.
 

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I got my Prius in May, so ????

If the magic number was reached sometime in May,how do I find out if I am in the 60K group? I got my car in May and hope not to be 60K plus 1 group!!!!
 

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mari - that is what I was saying above. Don't get hung up on that number. Toyota got to that number in the early spring, which is why the cut-off was set at the end of September. If you take delivery on or before September 30, 2006, you get the full $3,150 tax credit. Go on vacation, put it in your retirement account, or recarpet your home. Enjoy the $$$ - it is your's! :lol:
 

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Re: I got my Prius in May, so ????

Mari said:
If the magic number was reached sometime in May,how do I find out if I am in the 60K group? I got my car in May and hope not to be 60K plus 1 group!!!!
You could be the 160,000th and it wouldn't matter. The point is that you take delivery of your vehicle on the same or subsequent calendar quarter when Toyota reached 60K cars sold. If they managed to sell 100K more cars after they reached 60K, but within those quarter boundaries, those cars qualify.
 

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Re: I got my Prius in May, so ????

DanMan32 said:
Mari said:
If the magic number was reached sometime in May,how do I find out if I am in the 60K group? I got my car in May and hope not to be 60K plus 1 group!!!!
You could be the 160,000th and it wouldn't matter. The point is that you take delivery of your vehicle on the same or subsequent calendar quarter when Toyota reached 60K cars sold. If they managed to sell 100K more cars after they reached 60K, but within those quarter boundaries, those cars qualify.
My, my, is it not wonderful that we pay these <ahem> legislators good money to write these convoluted laws ostensibly for our benefit? :wink:

And you thought walking the sobriety line was a challenge!! :)

Thank ChipSoft/Intuit for TurboTax :lol: :lol:
 

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Convoluted? Not convoluted at all. They made it so that you don't have to find out if you are 60K or 60K+1. You only have 4 dates in the year you have to worry about. Calendar quarters begin on Jan1, April 1, July1, and Oct1. They end the day before the next one begins.

So, since Toyota sold the 60Kth car in May, that falls in the quarter that begins April 1st, and ends June 30th. You have that quarter, and the following quarter, which begins July 1st and ends Sept 30th to get the full credit. Therefore, you have until September 30th.

For Hondas, the dates you watch for are still only 4: Jan1, April1, July1, and Oct1.
 

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The way they could have made this less convoluted would have been to make all cars purchased in 2006 available for the credit. I don't see what the rationale for the 60,000 cutoff. Is it possible that Toyota will be the only maker to hit that mark this year?

I also like the very clear explanations that I am seeing here. I could not get anything like that from the dealer or the IRS back when I was buying the Prius in February. The best I could get is that the credit would "likely" be $3150. The dealer didn't know any more than I knew.
 
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