Does the 2006 Hybrid Tax Credit apply if you are subject to the AMT?

Question

The law changed recently, and it isn't clear to me whether the hybrid tax credit is exempt from the AMT. Searching on the net finds both yes and no answers!

Answer 1

the credit is based upon when you buy the car, not how early you file your taxes.

it appears that the AMT no longer affects the hybrid credit. quick quote from an article describing the bill before it was signed: "In addition, when calculating whether they're subject to AMT, taxpayers will be allowed to use all nonrefundable personal credits to offset AMT liability. Normally, these credits often end up being disallowed under AMT."
http://money.cnn.com/2006/05/16/pf/taxes/tax_bill_and_you/index.htm?cnn=yes

Answer 2

The Federal Tax Credit for purchasing a hybrid fuel vehicle is not dependent upon whether you fall into the AMT (Alternative Minimum Tax) or not. It is not income sensitive. The only criteria is that you must itemize your taxes. Also, be advised that only a certain number of these "credits" are available on a first filer basis. Once the credits have been depleted, the credit will not be allowed. If you plan on trying to use this credit, you'd be well served to file as early as possible.

Answer 3

Quoting from:
http://www.toyota.com/prius/tax.html
"The benefit of the hybrid vehicle tax credit will also be substantially reduced or eliminated if the individual purchaser is subject to the federal alternative minimum tax (AMT). Individual purchasers and corporations who have business use of the Hybrid vehicle are subject to different tax laws that may also substantially reduce or eliminate the tax benefits. Again, it is recommended that you consult a tax or accounting professional when claiming a deduction or credit on one’s income tax return."

For the Clean Fueled Vehicle Deduction that hybrid owners could take through tax year 2005, you did not need to itemize your deductions in order to take the deduction, as it had its own line item (see IRS Publicatoin 535, chapter 12).

As for how to file for the 2006 hybrid tax credit, that is still unknown (as of my writing on June 30, 2006), as the IRS hasn't published the 2006 tax publications yet. http://www.irs.gov/newsroom/article/0,,id=157557,00.html suggests that you may have to file a separate form to claim the credit (and also lists the maximum credit allowable depending on which hybrid you purchased).

The amount of the hybrid tax credit depends on when you purchased your hybrid, which hybrid you purchased, and how many hybrids a manufacturer has sold since Jan. 1, 2006 and the number of quarters following the magical 60,000th hybrid sold by that manufacturer.

Answer 4

The short answer is that the tax credit doesnt apply to anyone except for Government employees, and since Government employees are better than us, they dont have to drive hybrids. They drive monstertrucks everywhere. OPEN YOUR EYES, ITS A SCAM.

-J.