| With the recent push by President Bush for alternative | | | | credits are not taken out of your gross income. |
| fuel strategies, much confusion has arisen regarding | | | | Instead, tax credits are taken out of the exact amount |
| tax incentives for hybrid vehicles. This article clarifies | | | | of tax you owe the government. If you owe the |
| the issue for you. | | | | government $10,000 after filling out your tax return and |
| Tax Deductions for Your 2005 Hybrid Automobile | | | | can claim a $2,000 tax credit, your final tax bill is |
| People buy hybrid vehicles for different reason. They | | | | $8,000. |
| are good for the environment. They get much better | | | | You are stuck with a tax deduction tax deduction if |
| mileage, which saves money. There are tax incentives | | | | you purchased a hybrid in 2005, but at least it is a nice |
| for buying them. With the recent energy plan put in | | | | one. The deduction amount is $2,000 for vehicles |
| place by the federal government, there is a lot of | | | | certified by the IRS. They include: |
| confusion regarding the tax incentives. | | | | Ford Escape Hybrid: Model Year 2006 |
| Specifically, the question for most people is whether | | | | Mercury Mariner Hybrid: Model Year 2006 |
| they can claim a tax deduction or a tax credit when | | | | Lexus RX 400h: Model Year 2006 |
| they buy a hybrid. Here is the breakdown: | | | | Ford Escape Hybrid: Model Year 2005 |
| The Good - If you purchased a hybrid vehicle in 2005, | | | | Toyota Prius: Model Years 2001 through 2006 |
| you can claim a tax deduction. | | | | Toyota Highlander Hybrid: Model Year 2006 |
| The Bad - If you purchased a hybrid vehicle in 2005, | | | | Honda Insight: Model Years 2000 through 2005 |
| you cannot claim a tax credit. | | | | Honda Civic Hybrid: Model Years 2003 and 2005 |
| The Ugly - If you had waited till 2006, you could have | | | | Honda Accord Hybrid: Model Year 2005 |
| claimed a tax credit. | | | | To claim this deduction, you must have purchased a |
| Tax credits save you a lot more money than tax | | | | NEW hybrid. If the hybrid was used, you get nothing. |
| deductions. Tax deductions are applied to your gross | | | | Assuming it was new, the deduction is claimed on line |
| income like any other deduction. This helps lower your | | | | 36 of the 1040 form. Make sure to write Clean Fuel in |
| tax bill, but tax credits are much more powerful. Tax | | | | the space provided. |