I just recently bought a honda civic hybrid and the dealership said i could have $2,000 tax credit. i want to know if i will for sure get the 2 grand back. THanks!
2007-01-05 02:35:35 · 4 answers · asked by bea_ednave 1 in Business & Finance ➔ Taxes ➔ United States
The credit you are eligible for reduces your taxes owed. So if your taxes without the credit were $3,000, you pay only $1,000. If your taxes were less than $2,000 before the credit, you would pay no tax but you wouldn't get any cash back.
If you were already getting a refund before the credit, the vehicle credit doesn't change your tax refund.
2007-01-05 03:10:33 · answer #1 · answered by ninasgramma 7 · 1⤊ 0⤋
A tax credit is a dollar-for-dollar reduction in your tax liability. A tax deduction, on the other hand, reduces your income basis for taxation, so it wouldn't be a dollar-for-dollar decrease in your taxes.
In this case, your tax credit will be factored into your total tax liability minus what's been withheld from your paychecks. If you owed something before applying the credit, the credit will reduce that amount owed. Anything left over will be refunded to you. If you have a refund coming, that refund will be $2k bigger w/ the credit applied.
2007-01-05 05:14:45 · answer #2 · answered by CMass Stan 6 · 0⤊ 0⤋
There is a hybrid credit available on the federal 1040. I have never run across it myself.
http://www.irs.gov/newsroom/article/0,,id=165649,00.html
2007-01-05 02:58:48 · answer #3 · answered by Wayne Z 7 · 0⤊ 0⤋
It means you don't pay TAXES on that money -- the 2K, not that you would get it all back - darn, hey?? But you would probably get some back.
2007-01-05 02:38:04 · answer #4 · answered by kluvs2write 2 · 0⤊ 3⤋