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Hybrid Vehicles Toyota Camry Hybrid Toyota Camry Hybrid MPG-Real World Numbers
856 messages, Last post on Nov 22, 2009 at 8:38 AM
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Replying to: newcars (Sep 28, 2006 7:20 am) It's not that complicated. "Holding" back on the W4 simply delays what you eventually owe. It does not define your final taxes simply the witholding rate. If you've already paid in say $30,000 in Federal taxes and you did your return and found that you still owed $2000, then you would recieve a "refund" of $600. In your case if you only paid $2000 then unless you have an AMT issue you should get it all back reguardless if it's already been witheld or not.
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Replying to: wvgasguy (Sep 28, 2006 10:15 am) To take up where you left off, if I already paid $30,000 in Federal taxes and did my return and found that (before I calculate in the $2,600 TCH tax credit) I still owed $2,000; I could use $2,000 of the TCH tax credit and owe nothing. But please note, I would NOT receive a $600 refund. And as you note, this does not take into account any AMT considerations. The thing I am trying to highlight is that you do not get any "refund" with the TCH tax credit. For example, if before I calculate in the TCH tax credit, I would get a refund of even just $1, then I would not get ANYTHING from the TCH tax credit. Nothing, nada. That's something I did not initially understand with about the TCH tax credit. And, being honest, I think it is a popular misconception. In truth, the TCH tax credit will never add to a refund; it can only be used to lower (or cancel) Federal income taxes owed. On a personal note, I usually end up owing money to Uncle Sam and I have increased my exemptions on my W4 now that I purchased my TCH (before September 30, 2006). However, my caveat is that I don't want people [thinking they are] doing what I did, increase their W4 exemption to something outrageous, and then being surprised when they owe Uncle Sam several thousands of dollars even with the full TCH tax credit. Like I cautioned before, consult your tax advisor.
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Replying to: newcars (Sep 28, 2006 11:22 am) Actually, you would. It's not a $2600 credit off what you still owe come April 15 (using $2600 and April 15 for simplicity). It's $2600 off your total tax owed for 2006, period, regardless of whether it's paid through withholding throughout the year or whether it's paid at the time you file your federal return. Under your scenario, I wouldn't get any credit at all - even if I pay $30,000 in federal income tax - since I always get a refund since I always have too much withheld during the year. But I WILL get the $2600 credit; I'll just get a bigger refund. The hybrid credit is against your entire federal income tax liability for the year, not how much you still owe come April 15th. If your entire federal income tax liability for 2006 is $2000, then you're right, you won't get $600 back. You could only claim the credit up to $2000, the amount of federal income tax paid/owed. If you'd already paid the $2000, you'd get $2000 back, the amount of the credit. If your entire federal income tax liability for 2006 is $30,000 and even if you owe them nothing else come April 15th, you will be eligible for the full $2600 credit (assuming you purchased prior to Oct 1 and aren't subject to AMT, blah blah blah) (Disclaimer: No, I'm not a tax advisor and don't pretend to be one. Go talk to your own tax advisor. I'm an individual taxpayer trying to figure this stuff out and explaining my interpretation as I go along.  )
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Does not matter if you had withholding, paid estimated taxes for 2006 etc, etc. The bottom line is that $2600 will be taken off your federal tax bill. If you have to pay extra taxes on April 15th it will be $2600 less. If you have already paid your taxes in full, it will be a $2600 refund.
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Replying to: ravichander (Sep 28, 2006 2:27 pm) http://www.nysscpa.org/sound_advice/money_9.11.06.htm To get back on topic, my current tank on my TCH is 40.4 MPG.
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Replying to: larsb (Sep 28, 2006 2:43 pm) http://www.nysscpa.org/sound_advice/money_9.11.06.htm With all due respect, I believe that you have interrupted it wrong. The "non refundable credit" part means that you can't get back more than your total fed tax obligation for the year. It HAS NOTHING TO DO with withholding. If your final tax obligation is $2,800 for 2006 (before considering the TCH purchase), and you bought the TCH prior to 10/1/2006, you would then have a tax obliation of $200. $28,00-$2,600=$200. The withholding is just a forced savings acct. If you had $3000 withheld in this example, with a final tax oblgation of $200,you would be getting a refund of $2,800 back. There were some cases in prior years (earned income credit, for example), where a family would earn a credit for low income, and actually get more $ back then what they had witheld. Basicaly had a NEGATIVE owed tax. Or the feds owed them money. This is actualy a form of "welfare". I am NOT a tax expert, but I truly believe I understand this correctly. I hope this helps. I am having my worst mpg on this current tank, 35.8mpg so far, due to many very short trips 1-2 miles, and constant use of A/C. My old car would have gotten only 18 in these conditions. Loving the TCH!!!
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Replying to: jbollt (Sep 28, 2006 4:20 pm) UNDERSTAND THE FINE PRINT The new tax break is a nonrefundable credit. This means the credit can reduce your regular income tax liability to zero, but it won’t produce a tax refund. So if you purchase a hybrid that comes with a tax credit of $2,200, and your tax bill is $2,000, you’ll lose $200 of the tax value of the credit. The excess credit cannot be carried over to another year. If you are eligible for multiple tax credits, there are special ordering rules that determine which credit to take first. The hybrid tax credit is taken last after all other tax credits have been taken. We can let the readers decide for themselves. However, as I said from the beginning, consult your tax advisor (and not the people who post on this forum, one way or the other  ).
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Since I can't modify my orginal post, I'll have to post this separate one. I am going to talk to my tax advisor and get a definitive answer. In fairness, I found this on the web: Get the Planning Ahead for the Hybrid Car Tax Credit This seems to support jbollt and gc77584. But I have also read and heard that the hybrid tax credit cannot be used to increase a refund under any circumstances. That's why on all the literature on the hybrid tax credit, it always states: The hybrid tax credit is taken last after all other tax credits have been taken. It's taken last because it (unlike most other tax credits) cannot be used to increase a refund. Either way, I think a lot of hybrid car owners are going to be surprised come tax time. It's things like these that keep tax accountants in business and the IRS busy. But back on topic (sort of), for me, this may all be moot. With only 50 miles on it; my brand new TCH will not start. Fortunately, this happened while I was back at the dealership but if they cannot fix the problem and give me a satisfactory explaination on how it happened and why it will never happen again, I am returning the piece of sh*t. And yes, I am furious that my brand new car with only about 50 miles on it will not start.
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It seems pretty typical for a TCH driver to apply all kinds of efforts to maximize MPG. The displays also give an additional advantage of letting you try and maximize electric motor usage. Any one have an idea on how much the great gas milage is related to the car, and how much is solely attributable to these efforts? I've got to believe that between easier acceleration, reducing highway speeds a bit, etc., I probably would have picked up about 5mpg. My first tank with my TCH, I think I averaged about 37mpg paying minimal attention to any efforts. Since then, I pretty consistantly average 41 with mixed highway/city but mostly highway miles. |
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Replying to: newcars (Sep 29, 2006 4:23 am) The new tax break is a nonrefundable credit. This means the credit can reduce your regular income tax liability to zero, but it won’t produce a tax refund. So if you purchase a hybrid that comes with a tax credit of $2,200, and your tax bill is $2,000, you’ll lose $200 of the tax value of the credit. The excess credit cannot be carried over to another year. That's the quote from the link. It does not support your argument. It's not that complicated. There is no "penalty" just because you paid in early! Your total tax liability is calculated on 2006 income. Doesn't matter at what rate you paid witholdings into the system, your liability is your liability. A tax credit goes against that liability on the bottom line. Even in the example the guy is talking about someone who only paid in $2000. The point is YOU CAN'T GET BACK MONEY YOU DIDN'T PAY IN. That’s because a tax credit directly cuts your tax bill, reducing the tax you owe, dollar-for-dollar. However, the credit is nonrefundable. This means that the credit can reduce your regular income tax liability to zero, but it won’t produce a tax refund. If reducing your tax liability to zero then the credit will give you back all you paid in. If not it will simply means you get a refund up to the $2600, depending on how much you might still owe in April. However it is not a rebate, meaning they won't give you money back you have not paid in just because you buy a hybrid. The article should not have used the "refund" word in the last sentence because it is confusing. However reading the above two quotes from the article it is not difficult to see what the credit will do. This may indeed be confusing for some who have never figured their own taxes out, but the government is not in some plot to try and cheat liberals out of their money by tricking them to buy hybrids.
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