TOYOTA PRIUS TAX CREDIT. Not able to get the 3k credit as I don't owe any tax. Only if I owe tax I get credit

Question

I bought TOYOTA PRIUS last year. I was happy that I can get 3K tax credit. But to my dismay, one can claim the tax credit only if I owe the tax.

It is not fair that I could not get credit just because I paid all my tax on time. If I did not pay tax and if I owe, as per turbo tax I can get the credit.

So for example, if I owe $3500 tax, then I get 3000 tax credit and I need to pay only $500. But, if I owe $500, I get $500 tax credit. Just because I paid $2500 tax ahead, I am not getting the toytoa prius tax credit. This is very unfair for the people that paid tax ahead.

Whether we withhold tax or not, the toal tax credit should be same. That is what turbo tax says, is this correct? Is there a way I can take the benefit of the whole $3000 tax credit.

Answer 1

If you paid money ahead, you will take the credit and the money you paid ahead can be refunded to you.

The credit reduces your tax liability for the year. The credit reduces the amount of tax owed on your adjusted gross income after deductions are subtracted.

If you have no tax liability then you do not get the credit. If your tax liability is less than $3000, then your credit will be less. It will only be enough to bring your liability to zero.

If you paid money ahead through withholdings, or making direct payments throughout the year, then the credit will allow a refund of that money already paid, up to $3000.

Answer 2

You're reading something wrong on TurboTax. It's not whether you owe when you file or have already paid in enough, it's your total tax liability for the year - line 11 on a 1040EZ, line 63 on form 1040, line 37 on a 1040A.

But you're correct that if you don't have any income tax for the year, then you don't get the credit. Or if you have some tax for the year, but less than the $3000, then the credit only reduces you tax to zero so you wouldn't get all of it.

But whether you have tax withheld or not, or have enough tax withheld or not, the credit is the same. Total tax doesn't have anything to do with what was withheld - it's BEFORE you get to that part on the tax form.

Answer 3

The tax credit applies to tax owed for the year, not to tax owed at tax filing time. So if you paid over $3150 tax for the year, you should be eligible for the full credit. If you paid less than that, you can still get the credit for whatever you did pay. Even if you don't owe any more at filing time, you should get the credit as a rebate.

That is, of course, unless you are subject to the AMT, which more and more people are every year. For reasons that don't make any sense to me, the government has decided not to offer financial encouragement to people who are subject to the AMT to buy hybrid cars. The way the AMT is affecting more middle-class folks each year, it will soon be the case that if you can afford to consider buying a hybrid car, you won't be eligible for the tax credit that is supposed to encourage people to buy hybrid cars.

Answer 4

Stop paying ahead!!!! Our government sucks, they double dip on everything. Buy a car, your taxed, sell that car ,the next persons taxed. The government is only out for themselves. We, the low class people are being used and used again for the paycheck es of the rich. They only get richer from their rules they choose along the way. There is only two class of American people, rich and poor, they deleted the middle class cuz they are weeding us out. We need to step up to the plate and defend ourselves!!! Our American Dreams are not to be had. I consider my own to classes of people, the weak and the strong!!!! Guess who the strong ones are that will survive in the long run?? The big wigs have no common sense of anything simple in life!!! They wouldn't and couldn't survive what we can. We need to take them on!!! Find a licensed tax prep that works from their home. They know all the info, and are not associated to the BUSH ADMINISTRATION