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TAX INCENTIVES FOR ELECTRIC/CLEAN-FUEL VEHICLES December 04, 2004 1:11 PM

TAX INCENTIVES FOR ELECTRIC AND CLEAN-FUEL VEHICLES http://www.fueleconomy.gov/feg/tax_afv.shtml Qualifying electric vehicles and clean-fuel vehicles (including gasoline/electric hybrids) purchased new are eligible for federal income tax incentives.  Clean-fuel vehicles: One-time tax deduction up to $2,000  Electric vehicles: One-time tax credit up to $4,000 per vehicle The current incentive will be reduced to $500 in 2006 and will expire in 2007. Note: The clean-fuel vehicle tax deduction was originally scheduled to phase out starting in 2004. Vehicles bought in 2004 were eligible for a maxiumum deduction of $1,500, and those bought in 2005 were eligible for a $1,000 deduction. However, the "Working Families Tax Relief Act of 2004" has extended the $2,000 deduction through 2005. OTHER INCENTIVES Some state and local governments also provide incentives for alternative fuel vehicles, so you may want to check with your state or local government. The U.S. Department of Energy's Clean Cities Vehicle Buyer's Guide for Consumers may also have useful information on state/local incentives. Clean-Fuel Vehicle Incentives Consumers purchasing a new clean-fuel vehicle by the end of 2005 may be eligible for a "Clean-Fuel" vehicle tax deduction of up to $2,000! This also applies to gasoline/electric hybrids. The credit will be reduced to $500 in 2006 and will expire in 2007. What are clean-fuel vehicles? How do I claim the deduction? Whether you itemize or take the standard deduction, you can still claim the clean-fuel tax deduction. Unless the vehicle is purchased solely for business use, simply include the deduction on line 32 of your 1040 tax form in the "Adjusted Gross Income" section. Enter the amount of the deduction and the words "Clean Fuel" on the dotted line next to line 32. If you purchased the vehicle solely for business use, just claim the deduction on the "Other expenses" line of either Schedule C (1040) or Schedule F (1040). What if I bought my vehicle before 2004? You can claim the deduction on these vehicles by filing an amended tax return for the tax year in which the vehicle was purchased. Are there other requirements? Yes.  You must purchase the vehicle new and for your own use, not for resale  You must drive it mostly in the United States  The vehicle must meet all federal and state emissions requirements  Government agencies, tax exempt organizations, and foreign entities not eligible If any of these conditions change within 3 years of purchase, you may have to return some of the money saved by the deduction.  [ send green star]  [ accepted]
 
 December 04, 2004 1:12 PM

Are gasoline/electric hybrids also eligible for electric vehicle tax credits? No. Some sources have stated that, because gasoline/electric hybrids use an electric motor, they are eligible for electric vehicle tax credits. According to the IRS, this is incorrect. Are electric vehicles eligible for clean-fuel tax deductions? No. Electric vehicles are only eligible for electric vehicle tax credits. Where can I find additional information? IRS Home Page IRS Moves to Clarify Taxpayer Deduction for Hybrid Vehicles (5/12/02) IRS Technical Publication 535: Business Expenses (includes clean-fuel deduction info for personal use also) Schedule F (1040) Instructions Schedule C (1040) Instructions Electric Vehicle Incentives If you buy an electric vehicle new, you may be eligible for a one-time federal income tax credit of up to $4,000! Electric vehicles purchased new are eligible for a credit of 10% of the vehicle cost up to $4,000 per vehicle. The credit will be reduced to $1,000 in 2006 and will expire in 2007. Note: The electric vehicle tax deduction was originally scheduled to phase out starting in 2004. Vehicles bought in 2004 were eligible for a maxiumum deduction of $3,000, and those bought in 2005 were eligible for a $2,000 deduction. However, the "Working Families Tax Relief Act of 2004" has extended the $4,000 deduction through 2005. How do I claim the credit? What if I bought my vehicle before 2004? You can claim the deduction on these vehicles by filing an amended tax return for the tax year in which the vehicle was purchased. Are there other requirements? Yes.  You must purchase the vehicle new and for your own use, not for resale  You must drive it mostly in the United States  The vehicle must meet all federal and state emissions requirements  Government agencies, tax exempt organizations, and foreign entities not eligible If any of these conditions change within 3 years of purchase, you may have to return some of the money saved by the deduction. Note: Gasoline/electric hybrids are not eligible for electric vehicle tax credits. However, some are eligible for clean-fuel vehicle incentives.  [ send green star]  [ accepted]
 
 December 06, 2004 8:39 PM

I know a lot of people wouldn't like this, but why can't the clean vehicle tax credits have their opposites? That is, the lower end fuel economy vehicles would be taxed $2000, and the really bad ones would be taxed $4000. Whether this encourages sales of hybrids, discourages sales of SUVs, or contributes to the government's revenue, it would be a good thing.  [ send green star]  [ accepted]
 
punitive taxes December 06, 2004 8:47 PM

I've run into a few care2 members who oppose punitive taxes because they are not politically palatable. But they make more sense. http://www.care2.com/c2c/groups/disc.html?gpp=1952&pst=14446&archival=  [ send green star]  [ accepted]
 
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