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
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
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!
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.
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
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.
i love the car though, but can't justify paying $2000 more over 5 years. I can swallow $1000, but $2000 is a lot
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...
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?
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
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.
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
but the exception should be the lemon law. if you think you have a lemon, then perhaps you should go down this route.
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."
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
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:
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.
in Mass, there really aren't any perks in getting a hybrid...we don't even get to use the carpool lane
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.
Used and Leased Vehicles
A consumer that leases a hybrid vehicle is not eligible for the credit. The credit is allowed to the vehicle owner, including the lessor of a vehicle subject to a lease. That means that the lessor (the person who leases the vehicle to the consumer) is the person who can claim a credit for the vehicle.
A credit for a hybrid vehicle can only be claimed by the original purchaser of the vehicle, that is, the purchaser of a new vehicle. The credit does not apply to a used hybrid vehicle.
I purchased my Altima in June of 2008. I traded in another car. They worked off full retail of 33,500 on my trade, but I still did a good trade. I've had the Altima for 14 months and it has been flawless. I get 34 no matter how I drive it. I do intend to keep it for the 3 full years. Cheers! :
"
Q. Does the Alternative Minimum Tax (AMT) impact the alternative motor vehicle credit?
A. Starting in 2009, the new law allows the alternative motor vehicle credit, including the tax credit for purchasing hybrid vehicles, to be applied against the alternative minimum tax. Prior to the new law, the alternative motor vehicle credit could not be used to offset the AMT."