2009 Fusion Hybrid Tax Credit

[Grey]

I just visited the Turbo Tax site online and they have followed the 8910 form for gathering your purchase and "in-service" information. People that don't follow the forums may make the mistake of putting their delivery date as their purchase date. If you ordered your Hybrid, put the date of your order in the purchase date box. The in-service date is the date you took possession and began driving your new hybrid. The program should calculate your tax credit correctly from there.

 

 

 

If you purchased from dealer inventory, your "purchase" date and in-service date may be the same.

 

 

 

I ordered my Fusion Hybrid in February and took delivery in April of 2009 so I will get the full $3,400 tax credit against my 2009 taxes. Order by 3/31 = $3,400, Order by 9/30 = $1,700, Order by 3/31/2010 = $850 ---after that $0. If you order in 2009 but don't take possession until 2010, you will have to wait until 2011 to claim the credit against your 2010 taxes.

 

 

 

A lot of tax preparers will not understand this 8910 form and buyers will miss out on the tax credit they should get - same with IRS phone clerks. They are going to try to tell you that the purchase date is the date you signed the final papers - not so --- your order was the committment to purchase and that date should be in the purchase box.

[Cary28]

I just visited the Turbo Tax site online and they have followed the 8910 form for gathering your purchase and "in-service" information. People that don't follow the forums may make the mistake of putting their delivery date as their purchase date. If you ordered your Hybrid, put the date of your order in the purchase date box. The in-service date is the date you took possession and began driving your new hybrid. The program should calculate your tax credit correctly from there.

 

 

 

If you purchased from dealer inventory, your "purchase" date and in-service date may be the same.

 

 

 

I ordered my Fusion Hybrid in February and took delivery in April of 2009 so I will get the full $3,400 tax credit against my 2009 taxes. Order by 3/31 = $3,400, Order by 9/30 = $1,700, Order by 3/31/2010 = $850 ---after that $0. If you order in 2009 but don't take possession until 2010, you will have to wait until 2011 to claim the credit against your 2010 taxes.

 

 

 

A lot of tax preparers will not understand this 8910 form and buyers will miss out on the tax credit they should get - same with IRS phone clerks. They are going to try to tell you that the purchase date is the date you signed the final papers - not so --- your order was the committment to purchase and that date should be in the purchase box.

That sounds very reasonable, and is the assumption many owners have on the process. However, it would be more comforting to have some IRS publications or online update to confirm that. I know my accountant had some concerns when I bought the car before the Oct 1st cutoff, and asked her about the filing process. :banghead:

[Grey]

Study the 8910 instructions provided by the IRS in 2007 - look at the example highlighted:

 

"Summary of the Credit for Qualified Hybrid Vehicles

 

Updated frequently — last updated Nov. 08, 2007

 

The Energy Policy Act of 2005 provides a credit for taxpayers who purchase certain energy efficient vehicles, including Qualified Hybrid vehicles.¹ Notice 2006-9 provides procedures for manufacturers to certify to the Internal Revenue Service that certain passenger autos and light trucks qualify for the credit and the amount of the credit.² The credit amount for qualified hybrid vehicles other than passenger autos or light trucks is computed using a different formula. Guidance regarding the credit for new qualified hybrid motor vehicles that are not passenger automobiles or light trucks will be provided in a separate notice. Generally, for a passenger car or light truck that is a qualified hybrid vehicle, a taxpayer may rely on the manufacturer’s certification that a specific make, model and model year vehicle qualifies for the credit and the amount of the credit for which it qualifies.³

 

Even though a manufacturer has certified a vehicle, a taxpayer must meet the following requirements to qualify for the credit:

 

The vehicle must be placed in service after 12-31-05 and purchased on or before 12-31-10.

 

 

The original use of the vehicle must begin with the taxpayer claiming the credit.

 

a. The credit may only be claimed by the original owner of a new, qualifying, hybrid vehicle and does not apply to a used hybrid vehicle.

 

 

The vehicle must be acquired for use or lease by the taxpayer claiming the credit.

 

a. The credit is only available to the original purchaser of a qualifying hybrid vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.

 

b. For qualifying vehicles used by a tax-exempt entity, the person who sold the qualifying vehicle to the person or entity using the vehicle is eligible to claim the credit, but only if the seller clearly discloses in a document to the tax-exempt entity the amount of credit.

 

 

The vehicle must be used predominantly within the United States.

Credit Phase Out

The new qualified hybrid motor vehicle credit begins to phase out in the second calendar quarter after the calendar quarter in which at least 60,000 of the manufacturer’s qualifying passenger automobiles and light trucks have been sold. Notice 2006-9 requires manufacturers that have received acknowledgement of its certification must submit to the Service a report of the number of qualified vehicles sold to a retail dealer during the calendar quarter. For this purpose, qualified vehicles are any passenger automobile or light truck that is a new advanced lean bury technology motor vehicle or a qualified hybrid motor vehicle. After review of the quarterly reports, the Service will issue an acknowledgement letter to the vehicle manufacturer stating whether purchasers many continue to rely on the certification.

 

Notice 2006-78 announced the credit phase out schedule for advanced lean burn technology vehicles and hybrid vehicles manufactured by Toyota Motor Sales USA, Inc. (Toyota and Lexus vehicles). For the period of 10-1-06 to 3-31-07, purchasers of qualifying vehicles are eligible for 50% of the allowable credit. For the period of 4-1-07 to 9-30-07, purchasers of qualifying vehicles are eligible for 25% of the allowable credit. The table below includes both the full credit and the reduced credit amount depending upon when the vehicle was purchased.

 

The date of purchase determines the amount of the credit available for a vehicle, i.e. whether a vehicle is eligible for the full credit or whether a portion of the credit is phased-out. The placed in service date determines the taxable year in which the credit may be claimed.

 

For example, if consumer A purchases a Prius on Sept. 30, 2006, and takes possession in February 2007, consumer A can claim the full credit for 2007, the year in which the vehicle is placed in service. On the other hand, if consumer B purchases a Prius on Oct. 1, 2006, and takes possession of the vehicle in February 2007, Consumer B can claim 50% of the credit in 2007, the year in which the vehicle is placed in service."

 

Since there is no other scenario that fits "Purchase on Sept.30, 2006 and take delivery on February, 2007" it is clear that a committment to purchase is the same as "purchase". If nothing else, copy this and give it to your accountant.

Edited January 5, 2010 by Grey

[Cary28]

Study the 8910 instructions provided by the IRS in 2007 - look at the example highlighted:

 

"Summary of the Credit for Qualified Hybrid Vehicles

 

Updated frequently — last updated Nov. 08, 2007

 

The Energy Policy Act of 2005 provides a credit for taxpayers who purchase certain energy efficient vehicles, including Qualified Hybrid vehicles.¹ Notice 2006-9 provides procedures for manufacturers to certify to the Internal Revenue Service that certain passenger autos and light trucks qualify for the credit and the amount of the credit.² The credit amount for qualified hybrid vehicles other than passenger autos or light trucks is computed using a different formula. Guidance regarding the credit for new qualified hybrid motor vehicles that are not passenger automobiles or light trucks will be provided in a separate notice. Generally, for a passenger car or light truck that is a qualified hybrid vehicle, a taxpayer may rely on the manufacturer’s certification that a specific make, model and model year vehicle qualifies for the credit and the amount of the credit for which it qualifies.³

 

Even though a manufacturer has certified a vehicle, a taxpayer must meet the following requirements to qualify for the credit:

 

The vehicle must be placed in service after 12-31-05 and purchased on or before 12-31-10.

 

 

The original use of the vehicle must begin with the taxpayer claiming the credit.

 

a. The credit may only be claimed by the original owner of a new, qualifying, hybrid vehicle and does not apply to a used hybrid vehicle.

 

 

The vehicle must be acquired for use or lease by the taxpayer claiming the credit.

 

a. The credit is only available to the original purchaser of a qualifying hybrid vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.

 

b. For qualifying vehicles used by a tax-exempt entity, the person who sold the qualifying vehicle to the person or entity using the vehicle is eligible to claim the credit, but only if the seller clearly discloses in a document to the tax-exempt entity the amount of credit.

 

 

The vehicle must be used predominantly within the United States.

Credit Phase Out

The new qualified hybrid motor vehicle credit begins to phase out in the second calendar quarter after the calendar quarter in which at least 60,000 of the manufacturer’s qualifying passenger automobiles and light trucks have been sold. Notice 2006-9 requires manufacturers that have received acknowledgement of its certification must submit to the Service a report of the number of qualified vehicles sold to a retail dealer during the calendar quarter. For this purpose, qualified vehicles are any passenger automobile or light truck that is a new advanced lean bury technology motor vehicle or a qualified hybrid motor vehicle. After review of the quarterly reports, the Service will issue an acknowledgement letter to the vehicle manufacturer stating whether purchasers many continue to rely on the certification.

 

Notice 2006-78 announced the credit phase out schedule for advanced lean burn technology vehicles and hybrid vehicles manufactured by Toyota Motor Sales USA, Inc. (Toyota and Lexus vehicles). For the period of 10-1-06 to 3-31-07, purchasers of qualifying vehicles are eligible for 50% of the allowable credit. For the period of 4-1-07 to 9-30-07, purchasers of qualifying vehicles are eligible for 25% of the allowable credit. The table below includes both the full credit and the reduced credit amount depending upon when the vehicle was purchased.

 

The date of purchase determines the amount of the credit available for a vehicle, i.e. whether a vehicle is eligible for the full credit or whether a portion of the credit is phased-out. The placed in service date determines the taxable year in which the credit may be claimed.

 

For example, if consumer A purchases a Prius on Sept. 30, 2006, and takes possession in February 2007, consumer A can claim the full credit for 2007, the year in which the vehicle is placed in service. On the other hand, if consumer B purchases a Prius on Oct. 1, 2006, and takes possession of the vehicle in February 2007, Consumer B can claim 50% of the credit in 2007, the year in which the vehicle is placed in service."

 

Since there is no other scenario that fits "Purchase on Sept.30, 2006 and take delivery on February, 2007" it is clear that a committment to purchase is the same as "purchase". If nothing else, copy this and give it to your accountant.

That example looks quite applicable to placing an order and taking delivery in a few months, while using the original order date as the date of purchase. This will hopefully establish precedence for the IRS filing this year. Thanks for digging this one out.

[Grey]

Just remembered a statement from Consumer Reports from Jan. 2009=====

 

"Ford Motor Company hybrids, along with the Escape and Mariner hybrid SUVs, are eligible for full tax credits if purchased or ordered before March 31st. After that time, the credits are reduced by 50 percent due to Ford crossing the 60,000-vehicle threshold that begins a scale-down process for tax credits. "

 

And this from ask.cars.com======

 

"Tax analysts at H&R Block say the purchase contract for a new car will set the date for when you qualify for the credit. Delivery paperwork from the dealership will verify the in-service date. As long as the vehicle is placed in service during the 2009 calendar year, you will be able to claim the tax credit on your 2009 taxes. "

 

I looked at the Turbo Tax form online and they do not provide any insight regarding the ordering date establishing the "Purchase" date. Too bad! A lot of tax preparers and self filers will miss the full credit to which they are entitled because the 8910 instructions don't make it clear. I have not looked at H&R Block yet, but they may have clarified thepurchase/order date issue. If anyone gets their software, please advise how they handle the 8910 form.

[kirkster57]

Sales Tax on a new car purchase is deductable this year also depending on your income level. this is a stimulus measure and will not be in place forever.

 

I just visited the Turbo Tax site online and they have followed the 8910 form for gathering your purchase and "in-service" information. People that don't follow the forums may make the mistake of putting their delivery date as their purchase date. If you ordered your Hybrid, put the date of your order in the purchase date box. The in-service date is the date you took possession and began driving your new hybrid. The program should calculate your tax credit correctly from there.

 

 

 

If you purchased from dealer inventory, your "purchase" date and in-service date may be the same.

 

 

 

I ordered my Fusion Hybrid in February and took delivery in April of 2009 so I will get the full $3,400 tax credit against my 2009 taxes. Order by 3/31 = $3,400, Order by 9/30 = $1,700, Order by 3/31/2010 = $850 ---after that $0. If you order in 2009 but don't take possession until 2010, you will have to wait until 2011 to claim the credit against your 2010 taxes.

 

 

 

A lot of tax preparers will not understand this 8910 form and buyers will miss out on the tax credit they should get - same with IRS phone clerks. They are going to try to tell you that the purchase date is the date you signed the final papers - not so --- your order was the committment to purchase and that date should be in the purchase box.

[seamusbleu]

Sales Tax on a new car purchase is deductable this year also depending on your income level. this is a stimulus measure and will not be in place forever.

I've put my FFH order in a month and a half ago. I expect to take delivery in 2-4 weeks. I need to read through this again before making my final analysis, but I know I'll be able to claim the hybrid credit. I'm not sure if it will be for my 2009 tax return or 2010 one. As to the sales tax deduction, I'm less sure. Right now, I'm planning on taking the deduction. As a hedge, I've already put down money on my purchase in excess of the taxes that will be paid. My thinking is that I have already "paid" the taxes in 2009. I won't know for sure which way I'll go until I send in the return, but I'm interested to hear others opinions.

[Grey]

The tax credit year is controlled by the date you put the Hybrid in service. You qualify for the credit in place at the time you make the commitment to purchase. You must wait untill next year to file against your 2010 taxes if you take delivery in 2010.

 

I expect the tax refund for sales tax is based on the date the tag/tax office receives the taxes paid. Better check this out carefully. A deposit does not normally have anything to do with the sales taxes that will be owed at delivery.

 

Let us know how your tax program or preparer handles both issues.

[Grey]

I just installed the 2009 version of Turbo Tax on my computer and rushed over to the Tax Credit folder. The Hybrid purchase data capture form is like the 8910 IRS form - that is, it doesn't spell out that the purchase date (which sets the amount of credit you may claim) can be the same as your order (commitment to puirchase) date. A lot of tax preparers will miss this distinction and tax payers will miss out on their full credit eligibility.

 

Don't let it happen to you!

 

The program does appear to do a good job of describing and capturing the sales tax credit, if your state is eligible.

[fsb99]

I just installed the 2009 version of Turbo Tax on my computer and rushed over to the Tax Credit folder. The Hybrid purchase data capture form is like the 8910 IRS form - that is, it doesn't spell out that the purchase date (which sets the amount of credit you may claim) can be the same as your order (commitment to puirchase) date. A lot of tax preparers will miss this distinction and tax payers will miss out on their full credit eligibility.

 

Don't let it happen to you!

 

The program does appear to do a good job of describing and capturing the sales tax credit, if your state is eligible.

 

So you're saying that TT properly accounted your expected tax credit or have you not gone that far yet? THANKS!

[Grey]

So you're saying that TT properly accounted your expected tax credit or have you not gone that far yet? THANKS!

 

I will get the correct credit because I know what to put as the "Purchase" date ----- the date I made the commitment to purchase (my order date).

 

Most people, including IRS agents, tax preparers, CPA's, etc. will not understand the form and people will assume the purchase date is when you take deliivery ---Not so, that is the "in service" date. I bet if you call the IRS 10 times on the "Purchase Date" issue, 6 responders will get it wrong.

[Howie411]

I will get the correct credit because I know what to put as the "Purchase" date ----- the date I made the commitment to purchase (my order date).

 

Most people, including IRS agents, tax preparers, CPA's, etc. will not understand the form and people will assume the purchase date is when you take deliivery ---Not so, that is the "in service" date. I bet if you call the IRS 10 times on the "Purchase Date" issue, 6 responders will get it wrong.

 

 

 

Is there 2 tax credits? One for buying the Hybrid and then one for purchasing a new car between before Dec 29th 2009 because of the 09 Stimulus package?

[seamusbleu]

Is there 2 tax credits? One for buying the Hybrid and then one for purchasing a new car between before Dec 29th 2009 because of the 09 Stimulus package?

There is a tax /credit/ for buying before March of '10, and a sales tax /deduction/ for buying in (approximately the last 3/4th of ) '09. The credit is subtracted from the taxes you owe. The deduction just reduces the income that gets taxed (assuming you itemize your deductions). Thats the simple explanation. I'm sure others will chime in on the details I skipped.

[rpreuss]

There is a tax /credit/ for buying before March of '10, and a sales tax /deduction/ for buying in (approximately the last 3/4th of ) '09. The credit is subtracted from the taxes you owe. The deduction just reduces the income that gets taxed (assuming you itemize your deductions). Thats the simple explanation. I'm sure others will chime in on the details I skipped.

 

I believe that you can get the sales tax deduction even if you do not itemize.

[akirby]

I believe that you can get the sales tax deduction even if you do not itemize.

 

This is not a deduction. It's a tax credit. Deductions are used when you itemize and they reduce your income which reduces your tax bill by some percentage. A tax credit OTOH is deducted directly from your taxes owed.

 

e.g. You would save $1700 with a $1700 tax credit (assuming you pay at least $1700 in taxes that year). With a $1700 tax deduction you would only save $1700 times your tax rate (e.g. $1700 x 0.28 = $476 savings).

[Grey]

Allen, I think he was referring to the sales tax deduction and not the hybrid tax credit. I have not begun loading income and withholdings in my TT program yet so it won't actually compute anything. As soon as I gert some 1099's, I can try both the Hybrid tax credit and the sales tax deduction to see if they work as they should (except for the fact that they don't do a good job of describing the "Purchase" date qualification.)

[akirby]

Allen, I think he was referring to the sales tax deduction and not the hybrid tax credit. I have not begun loading income and withholdings in my TT program yet so it won't actually compute anything. As soon as I gert some 1099's, I can try both the Hybrid tax credit and the sales tax deduction to see if they work as they should (except for the fact that they don't do a good job of describing the "Purchase" date qualification.)

 

Oops. That's what I get for skimming and not reading thoroughly.

[seamusbleu]

Unless I'm reading this wrong, the "placed in service" date, determines the tax year the credit (and maybe deduction) can be filed. I won't take possession of my FFH until 2010. I won't be filling out any irs forms for 2010 until well into 2011. I'm guessing that well before then, the irs will issue some sort of clarifying notice like the one Grey pointed out, above. (Several IRS links point out the purchase/take possession phrase. Here's one of them: http://www.irs.gov/newsroom/article/0,,id=157557,00.html).

 

Thanks, Grey, for posting that irs summary.

[Grey]

2009 Turbo-Tax program will correctly compute your FFH Hybrid tax credit. I put 2/26/2009 as my purchase date (the date I committed/ordered) and 4/14/2009 as the date placed in service and up popped $3,400. That made me happy.

 

Now I wish I had ordered two.

Edited January 22, 2010 by Grey

[fsb99]

2009 Turbo-Tax program will correctly compute your FFH Hybrid tax credit. I put 2/26/2009 as my purchase date (the date I committed/ordered) and 4/14/2009 as the date placed in service and up popped $3,400. That made me happy.

 

Now I wish I had ordered two.

 

Awesome...that was what I was asking about earlier...THANKS!

[rlawson4]

I bought a FFH and Mercury Mariner Hybrid for my wife. Will Turbo tax do more than one credit correctly? Thanks.

 

Richard