The Hybrid Car Tax CreditIf you buy a new hybrid automobile, you could be eligible for a one-time federal income tax deduction of as much as $2,000.

Several models of hybrid vehicle placed in service by the end of 2005 are eligible for a clean fuel deduction of $2,000. Those put in use during 2006 could be eligible for a $500 federal income tax deduction.

Under current legislation cars purchased after 2006 won't be eligible for a deduction. If you purchased a hybrid vehicle before 2005, you can submit a claim for the deduction by filing an amended tax return for the tax year in which the automobile was bought.

The following stipulations must be met for your hybrid vehicle to qualify:

* You must buy the automobile new and for your own use. Automobiles purchased for resale don't qualify.

* You must drive the vehicle "mostly" in the United States.

* The automobile must meet all federal as well as state emmissions requirements.

* Government agencies, tax exempt organizations, and foreign entities are not eligible for the deduction.

* If any of the above conditions change within three years of the automobile purchase, you may be required to return some of the money saved by the deduction.

The following vehicles currently qualify for the deduction. Other hybrids may be approved at a later date:

2005 Ford Escape Hybrid
2005 Honda Accord Hybrid
2003-2005 Honda Civic Hybrid
2000-2005 Honda Insight
2001-2005 Toyota Prius

Whether you itemize or take the standard deduction doesn't matter. Either way, you can still claim the clean-fuel tax deduction. Simply include the deduction for your hybrid automobile on your 1040 form in the "Tax, Credits, and Payments" section. Enter the appropriate amount of the deduction you're claiming and the words "Clean Fuel" in the space to the left of the block for line 35 and include the deduction for your hybrid automobile in the total.

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.

Tags: auto, buy, car, credit, deduction, escape, ev, ford, fuel, hybrid, hybrids, models, new, rent, sale, service, tax, vehicle

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.