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Nissan Altima Hybrid Federal Income Tax Credit

There seems to be repeated confusion about the Federal Income Hybrid Car Energy Tax Credit so I thought try to explain it a little better. However, I am not a tax expert and you are cautioned to consult your tax advisor to determine how much if any of the tax credit you will qualify for.

The Energy Policy Act of 2005 replaced the clean-fuel burning deduction with a tax credit. A tax credit is subtracted directly from the total amount of federal tax owed, thus reducing or even eliminating the taxpayer’s tax obligation. The tax credit for hybrid vehicles applies to vehicles purchased or placed in service on or after January 1, 2006.

The credit is only available to the original purchaser of a new, qualifying vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.

The credit is computed and given when you file your federal income tax return. It reduces your tax on a dollar for dollar basis. For the 2007 NAH (and probably the 2008 NAH purchased before 12/31/07) the credit will be $2,350. However, once 60,000 are sold it will start to be phased out.

There seem to be serveral gotchas, however, which you can read about in the article linked below "Hybrid tax credit bait and switch."

Please read all of the following links for a better understanding and speak with your tax advisor to determine if you are actually able to benefit from this credit.

Links
Current IRS Guidance (updated frequently)
Fueleconomy.gov better explanation than IRS
Hybrid tax credit bait and switch
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Comments

  • cptcmpostcptcmpost Posts: 25
    Let this be the thread for questions about the Altima Hybrid's tax credit. I don't have answers, but I do have questions and I am sure others do as well. I am also sure there are people out there that can point me the right direction to find the answers.

    First off, Altima's tax credit for 2007 is $2,350.

    My questions, how many Altima Hybrid have been produced thus far, and will be produced this year? Only the first 60,000 get the full credit.

    What do you need to do to claim the credit? i.e. how do you know if you qualify for the whole credit? Will the dealer give you something certifying it?

    Thanks!
  • langjielangjie Posts: 247
    http://www.hybridcars.com/federal-incentives.html

    This is a good site. Anyways, to answer your questions without you needing to dig through. You do not have to worry about Nissan selling 60,000 hybrids for at least 4+ years. I think the official number for last quarter was 3000 something. The incentive doesn't just go to the first 60,000 hybrids. After Nissan sells 60,000 hybrids, then at the end of that fiscal quarter, the tax credit will be halved. Nissan will probably make an announcement when they are about to reach that number...again not for awhile (even Honda isn't at 60,000 yet)

    As for claiming...
    You just need to include it in your tax return. If you use Turbotax, it will ask you during the interview. If you go to a tax guy, then you just need to tell them. How much of the $2,350 you get? Well, that depends if you need to pay the AMT (alternative minimum tax). If you don't, you will probably get it all back. But if your AMT is only $2000 lower then your regular tax, then you can only claim $2000 and the tax credit does not get rolled over. If you are single and make over 40,000, then this will probably not affect you. If you are married, it still probably won't effect you. If you have kids and a mortgage, then you might need to worry.
  • bcp01scu05bcp01scu05 Posts: 19
    Just to add to this, whether or not you pay AMT depends primarily on the complexity of your tax return and where you live. If you just have wages/interest, etc, and take the standard deduction, the chances of AMT affecting you are very low. But if you, like langjie said, have kids, deduct mortgage interest or other paid taxes, it's worth calculating an estimated AMT to see how much of the credit you might "lose" to AMT. For what it's worth, I fall into the former category and found that my AMT was nowhere near my actual paid taxes, so I'm expecting to receive the full credit.

    People in high-home-value, high-tax areas (many big cities like SF, LA, NYC, etc) are especially at risk.

    /AMT not being indexed to inflation is the single biggest problem with the current tax code... there is no way this many Americans should have to calculate tax based upon two wholly separate taxation methodologies
  • larsblarsb Posts: 8,204
    My advice to those who are curious and concerned about whether or not they will get the tax credit for an Altima hybrid:

    Buy the car if you like it. Don't if you don't. Don't factor in the tax credit at all. The tax credit, if you get it, will be mere GRAVY because you will own a quality car that you like and which insulates you against future high gas prices.
  • langjielangjie Posts: 247
    It would be so nice to think that way, but I had to factor in the tax credit. i don't really have much to fear about the AMT though because I'm right out of college, no mortgage, i don't make that much, not married.

    i love the car though, but can't justify paying $2000 more over 5 years. I can swallow $1000, but $2000 is a lot
  • I bought a new 2007 nissan altima hybrid a month ago and want to trade it in for a new 2007 Toyota Camry LE. Will I still be able to claim the tax credit for $2,350.00. Please advise or reference. Thanks.
  • stevedebistevedebi LAPosts: 3,812
    "I bought a new 2007 nissan altima hybrid a month ago and want to trade it in for a new 2007 Toyota Camry LE. Will I still be able to claim the tax credit for $2,350.00. Please advise or reference. Thanks."

    What? You are going to lose big time on that trade! You lost $2000 in value the moment you drove that Altima off the lot...

    Anyway, I think that you have to keep the vehicle for 3 years to claim the credit. If a person sold a vehicle at two years, for example, they would have to refund the part of the credit that remained. In your case, just don't claim the credit. I would run this past a tax professional...
  • langjielangjie Posts: 247
    no, you are not allowed to sell it that quickly
  • Thanks for the advice. The reason I want to trade it in is, it has having issues with the tires and now there are electrical problems. The dealer doesn't believe anything is wrong, but there are problems. There is so much time I can spend on the problem before I want to trade it in. I am thinking about just getting a 2.5S altima base.
  • Shouldn't you be looking for a new Mazda 6? Just kidding.

    I think you can claim the whole tax credit. It's only avaialable to the original purchaser so why wouldn't you be eligible for the full tax credit? I can't belive the IRS would keep track of whether you keep a car for three years and demand a "refund" if you sell before then. The idea was to get people to buy hybrids. If you sell, it would still be in use consuming less gas and emiting fewer emissions even if you aren't the one driving it. And what would happen if you totaled the car before three years?
  • Yeah, I am seriously thinking about trading it in due to tire issues and the dealer not wanting to fix it. I'll consult a tax professional before I make a move.
  • i really don't think there is only one dealer who is next to u, right? one don't do go to other one... if the same problem can't be fixed with in the 4 time than time to file a lemon law.
  • thanks for the advice. I have been to the dealership, americas tire company and new I will go to another dealership.
  • langjielangjie Posts: 247
    yes, definitely get opinions from different dealerships

    what kind of electrical problems do you have?

    *also, the federal tax credit law clearly states you're not allowed to immediately sell the car after buying it
  • so i guess the tax code states, I can't trade in the car. There has got to be a exception if there are problems with the car. One dealer said they will give me $19,000 for trade in. As for electrical problems, there are ringing sounds and mumurs as well as sounds from the battery pack. Tacking sounds inside battery pack.
  • *also, the federal tax credit law clearly states you're not allowed to immediately sell the car after buying it

    I don't see any clear indication. I think it's kind of vague - what kind of the time frame does immediate cover? - one week? - one month - a year?

    I would think they mean someone who buys the hybrid and then resells it without registering it just to claim the credit. I would think as long as you register the hybrid you'll be considered the original owner and be able to claim the entire credit with no adjustment if you happen to sell it or total it in an accident.

    Here's all could find on the IRS website about being eligible for the credit:

    (1) The vehicle is placed in service by the taxpayer after December 31, 2005, and is purchased on or before December 31, 2010.

    (2) The original use of the vehicle commences with the taxpayer.

    (3) The vehicle is acquired for use or lease by the taxpayer, and not for resale.

    (4) The vehicle is used predominantly in the United States.


    No matter what the interpretation, unless you're audited there's probably no way the IRS will ever know how long you keep the car.
  • Thanks for looking up the info. I'll take it to carmax and get it valued and if the loss is minimal then I will get rid of it and will probably never buy a nissan again. If not, I'll drive it for a year and then sell it privately.
  • stevedebistevedebi LAPosts: 3,812
    "Thanks for looking up the info. I'll take it to carmax and get it valued and if the loss is minimal then I will get rid of it and will probably never buy a nissan again. If not, I'll drive it for a year and then sell it privately."

    Don't forget to check with the tax professional, or don't claim the credit.

    I will quote a site I found:

    "The new law for the hybrid tax credit requires taxpayers to recapture their hybrid tax credit if they re-sell their hybrid car or truck. Further details will be provided by the IRS when they issue regulations to interpret and implement this new tax law. For now, I would advise against selling, leasing, or giving hybrid cars away until we find out how long you have to keep the car."

    Hybrid Tax Credits
  • langjielangjie Posts: 247
    it hums, but there shouldn't be ringing sounds...maybe murmurs....

    but the exception should be the lemon law. if you think you have a lemon, then perhaps you should go down this route.
  • langjielangjie Posts: 247
    ok, i guess it's not that clear. either i read that somewhere else or i misinterpreted the "not for resale"
  • I found this on the web

    http://www.bankrate.com/dls/itax/tax_adviser/20070619_hybrid_car_a1.asp

    It seems to indicate you won't have to "recapture" unless under very limited conditions:

    "I spent some time looking around for an answer and can't seem to come up with anything that says you'll have to pay back the tax credit you claimed in 2006.

    Form 8910 instructions say: "If the vehicle no longer qualifies for the credit you may have to recapture part or all of the credit. For details see Section 30B(h)(8)."

    That section says:

    The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit (including recapture in the case of a lease period of less than the economic life of a vehicle).

    Only purchasers of vehicles were allowed the credit, so the credit goes to the leasing company in the case of a leased vehicle. Under Section 30, that applied to electric vehicles, the credit would only have to be recaptured in certain limited circumstances: for example, if the car was modified so that it wasn't qualified anymore or if it was taken out of the country. Under that section, the regulations state that the credit would not have to be recaptured if the vehicle was sold or destroyed.

    I can't see any reason that the regulations under hybrid vehicles would be substantially different than those that apply to electric vehicles."
  • Thanks for the info. I really have a serious problem on my hand. I spent all of Friday at my closest nissan dealership due to my hybrid pulling to the right. After 6 hours, they dealer said they got differect alignment specs from Nissan Corporate and everything was fine. Well, I got on the Freeway and nothing changed. I hope nissan can either, swap my car, give me money back or I have no choice but to trade it in and take a huge loss unless I can still claim the tax credit and minimize my loss. I have owned half a dozen cars and the nissan atlima hybrid is the most expensive car I have purchasd and yet it has give me the most problems ever of any car I have owned and it hasn't been a month.
  • langjielangjie Posts: 247
    lemonlaw.com?
  • Is anyone up to date with current state/local incentives for hybrid vehicles sold in NY state? I've found several references to currently proposed bills, one for $4,000 tax credit, (A 4281). It seams every website has some other information.

    This would be good place to start:


    There's another forum on Edmunds regarding perks, but it's been quiet for many months. Can anyone share their findings?
    Thanx!

    Karol
  • Yup, that appears to be most up to date site about hybrid state incentives.
    It has only basic info though and I need to find out about that $4000 tax credit if it's in effect and how do I apply for it (when I do my taxes)? :confuse:
  • langjielangjie Posts: 247
    try looking up the senate bill number and maybe you'll get more info on it
  • Yeah, did that too, got the bill number and even downloaded an entire text of bill (fun read I tell ya).

    A lot of these bills are proposed but never see the light of day. When something does get passed, I hope it will be retroactive for people who already got the hybrid.

    Long time ago (2-3 years I think) there was a bill that exempted you from paying state sales tax on hybrids in NY. That of course expired. More and more people are going green, so getting these bills approved would mean more money spent by the government and it will be harder to get them passed.
  • langjielangjie Posts: 247
    yep i agree that any extra incentives are taking forever...

    in Mass, there really aren't any perks in getting a hybrid...we don't even get to use the carpool lane
  • All these laws vary and by the time you find them on the web they're already not in effect.

    As for the car pool lane in NY, I think it depends what kind of hybrid you're driving as it must get above 50mpg etc. Altima Hybrid is below that so I won't qualify anyway.

    Actually just found this... but that's why highway of many.
    On 3/1/06, the Long Island Expressway's HOV lanes' occupancy requirement will be waived for qualifying passenger vehicles meeting strict emissions standards, and having a highway fuel economy average of at least 45 miles per gallon.
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