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When I purchased my Prius on 3 Dec 05, the salesperson mentioned the 2005 $2000 tax break I would receive if I purchased the car that day. I then asked if the tax break was going to be extended beyond 2005. He said there was a bill before Congress, but he didn't know if it would pass.
I did a little checking and found out the following facts:

(A) The 2005 tax break was for the first 60K Prius' sold this year. Based on a little research, that should have been around mid July as they were selling at an average rate of 9,622 per month. Does anyone know exactly when Toyota sold the 60,000th Prius' this year?

(B) The President signed the 2006 Energy Plan into law on Aug 8, 2005.
It goes into effect on 1 January 2006 and will provide a tax break of $3,150 each for the first 60K Prius' sold in 2006.

It now appears that (1) I will not get the 2005 Tax break because I purchased my car after the 60,000th Prius was sold, and (2) I will not get the 2006 tax break because I purchased it in December 2005.

Salesmen, you gotta love 'em. Smoke, mirrors and a great deal of double talk and BS. I thought that Toyota salesmen would be honest.
But, when all is said and done, thay are, after all, car salesmen.

Comments please.

Fred
 

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The 60K limit is for cars bought in 2006. It is a tax credit which should result in a much higher savings to the buyer than the $2K deduction for the 2005 purchase.
 

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Right. No limit on $2000 deduction, which by the way probably translates to $500 in your pocket. Actually, the $2000 was supposed to have been phasing out to $500 (or would that have been $1000?) for 2005, but a bill in October 2004 retroactively suspended the phase out for 2004 and 2005.

The new energy bill that provided the tax credit replaces and cancels the $2000 deduction, which phased out to nothing or near nothing for 2006 anyway.

You have to watch those dealer salespeople; they'll tell you anything. Sometimes it is ignorance, sometimes a boldface lie. My salesman tried to tell me that I was entitled to a $2000 credit each year. I challenged him to find ANY documentation stating this, even a questionable web based one. All he could find was that there was a ONE TIME $2000 deduction (not yearly as he thought) which was already being phased down to $1500 for my purchase year 2004. This was before congress retroactively restored the full deduction for 2 years. Since he tried to find something, I attribute it to gross ignorance.
 

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My guess is that the sales people were given that phrase about the law not being settled. What yours said about the tax break was almost word for word what my salesman said in November. I called some CPAs to get some advice, but the best info on the tax breaks I got was from this forum.
 

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http://www.toyota.com/vehicles/2006/prius/tax.html

New Prius purchased up through Dec. 31, 2005 are eligible for a $2000 Clean Fueled Vehicle deduction on their US Federal taxes. (Individual states and localities may have other incentives.) No limit to how many hybrids purchased in a year. You do not need to itemize to take the deduction, but the amount of money back to you depends on your tax bracket. For the 2006 model year the deduction would be reduced from the $2000 down to $500, with no deduction available in 2007, barring any new federal legislation.

The 60,000 cutoff number is for the new hybrid vehicle credit that was passed in the latest Energy Bill, and refers to new Prius purchased on or after Jan. 1, 2006. No official numbers are out yet for how much the US federal income tax credit for the Prius will be worth (direct money off of what you owe), but estimates are in the $3000 range.

My understanding is that the new credit for 2006 cancels the Clean Fueled Vehicle deduction for 2006. I don't know if it is an either take one or the other situation, or if the Clean Fueled Vehicle Deduction is no longer applicable to hybrids starting in 2006...
 

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there is no "60k cutoff"

after the quarter in which 60k vehicles are sold, the credit begins to decrease.

for example. say toyota hits 60k cars in july. that's the beginning of Q3. any prius purchased in that quarter or the quarter after qualify for the full credit. after that it becomes a percentage of the full credit until it's phased out.

as far as cars purchased in 05, you get the deduction ONLY. it's the "clean fuel" deduction and you have to file the 1040 to claim it. the 06 credit won't apply to you.

afaik, the clean fuel deduction is being replaced by the new credit, so it won't be available for cars purchased in 06.
 

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galaxee said:
there is no "60k cutoff"

after the quarter in which 60k vehicles are sold, the credit begins to decrease.

for example. say toyota hits 60k cars in july. that's the beginning of Q3. any prius purchased in that quarter or the quarter after qualify for the full credit. after that it becomes a percentage of the full credit until it's phased out.
Let me restate then. 60,000 is the step point (for that quarter) where the full value of the hybrid tax credit in 2006 will no longer be available. After that 60,000 point, following quarters have a lower credit available, but those later sales are cut off from being able to take the full credit.

I'm willing to guesstimate that Toyota/Lexus will sell about 16,000 hybrids a month, +2000/-1000, so that would put them at the 60,000 point in April 2006 (Q2). So, I'm willing to guess that any purchases through the end of Q2 will get the full credit, before that is cut off and is reduced to a lower amount for future quarters...
 

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mrv said:
galaxee said:
there is no "60k cutoff"

after the quarter in which 60k vehicles are sold, the credit begins to decrease.

for example. say toyota hits 60k cars in july. that's the beginning of Q3. any prius purchased in that quarter or the quarter after qualify for the full credit. after that it becomes a percentage of the full credit until it's phased out.
Let me restate then. 60,000 is the step point (for that quarter) where the full value of the hybrid tax credit in 2006 will no longer be available. After that 60,000 point, following quarters have a lower credit available, but those later sales are cut off from being able to take the full credit.

I'm willing to guesstimate that Toyota/Lexus will sell about 16,000 hybrids a month, +2000/-1000, so that would put them at the 60,000 point in April 2006 (Q2). So, I'm willing to guess that any purchases through the end of Q2 will get the full credit, before that is cut off and is reduced to a lower amount for future quarters...
No, it is the FOLLOWING quarter that the reduction starts. In your estimation (60K reached in Q2), that would be Q4. Q3 gets full credit.
 

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What if you bought a USED Prius made November 2004 in December of 2005 where the previous owner didn't or has not filled for a tax deduction/credit on there 2004 or 2005 income tax forms?
 

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D said:
What if you bought a USED Prius made November 2004 in December of 2005 where the previous owner didn't or has not filled for a tax deduction/credit on there 2004 or 2005 income tax forms?
I have heard of it being done with some letter from a dealer if it was a previous demo/TRAC vehicle. But the IRS does pretty much say that the vehicle's use must begin with you (no used vehicles).
 

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Toyota sales reps were mentioned.... A note on car sales people in the US compared with Japan. I've never bought a car in Japan but based on my other experiences with Japanese customer service and what others have told me, it's probably a lot better. In general, CS in Japan is amazingly good, far better by comparison. Shopping in Japan, or phone CS, or even just public employees are way, waaaay, more courteous and respectful of the public. Has anyone ever put “detail oriented” on their CV? Japan is just “detail oriented” pretty much 24/7 culturally. That’s a general stereotype of course, but on average it holds true.

I think it’s also fair to say there are fewer rude customers in Japan. I think our system which is much more hostile and sometimes sleazy evolved due to cultural incompatibilities, uncertainty, and social/economic injustice within America. Most people in the US now expect bad customers or bad CS, and there is a lot more class hostility than elsewhere. In Japan though, people generally expect good CS and reasonable customers, and usually get them.

I think the reasons are that Japan generally is a very polite society relative to the US overall. Some people may not believe it, but you simply have to go there to see it. They're very courteous overall and not the LA fake smile kind. It’s more like British old world civility. My guess as to why would be the same as in primate studies when population density increase tends to correlate with increased displays of courtesy to prevent fighting. Also Japan’s traditional society, former authoritarian feudal culture, and family authority hierarchy probably also contribute, as is the case with other Asian cultures.

Of course I still live here because in places like the SF Bay Area we have other advantages like cultural diversity that I really miss there. But CS, definitely better in Japan.

btw: River Rat, you should mention the name of the dealership and the sales person's name (assuming that's not considered libel?) so that others can avoid such sleazy treatment.
 

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About that $2000 deduction on the 05's....

I just finished doing my taxes with the "H&R Block TaxCut" software program. It has the $2000 deduction for fuel efficient cars such as the Prius buried within it.

However, since my house is paid for as are most things I own, I have less than $5000 in deductions even with the Prius. Consequently, I opted for the standard deduction of $5000.

To me, the $2000 deduction was a nice bait by the salesman, but it really doesn't apply for me or anyone who has less than the allowed $5000 standard deduction.

The $3000 credit on the 06's may be better, but who knows how that'll figure in Jan. 07 when the Feds release the final forms.

:cry:
 

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galaxee said:
that 2k comes right off your AGI. it shouldn't be included with your itemized deductions.
hmmm....???

I went back over the pages the program printed out. You are correct. The program calls it a "Clean Fuel Deduction" and it took the $2K off the TGI (Total Gross Income) and reports it correctly in the AGI (Adjusted Gross Income) box.

I wondered why the refund looked a little higher than in previous years. :D

The program appears to have added the $2K back onto the AGI wages reported on the Federal tax return for the State tax return. It calls it a "California Addition" to the Federal AGI.

All is well, I hope, since I already stamped the envelopes.
 

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That might be because California doesn't allow for the clean fuel AGI deduction, so it has to be added back. A few states are like that, even though it's only a few dollars in taxes anyway.
 

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G. McCurdy said:
About that $2000 deduction on the 05's....

I just finished doing my taxes with the "H&R Block TaxCut" software program. It has the $2000 deduction for fuel efficient cars such as the Prius buried within it.

However, since my house is paid for as are most things I own, I have less than $5000 in deductions even with the Prius. Consequently, I opted for the standard deduction of $5000.

To me, the $2000 deduction was a nice bait by the salesman, but it really doesn't apply for me or anyone who has less than the allowed $5000 standard deduction.
You do not have to itemize to take the US Federal Clean Fueled Vehicle deduction on your 2000-2005 income taxes. It is its own line item. (You can take it and also take the standard deduction.)

(It's called a deduction, but more appropriately it should be called an adjustment to gross income (AGI).)

It is possible that you cannot take the Clean Fueled Vehicle deduction, though, but that has to do with hitting AMT.

Note that not all states will allow you to claim the Federal Clean Fueled Vehicle deduction on your state income taxes... (MA allowed it only for purchases up through the 2004 tax year, but no longer for 2005...)
 
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