2006, or 2005 Prius?

The dealer has to make some money on your used Corolla so you will do better selling it outright. I'd replace the hub cap, give it a wax job and advertise it in the local paper. Of course, the problem with selling it outright is coming up with transportation between that sale and when you can take delivery on a Prius. Where I live, the wait for a Prius is down to 3 -

4 weeks.

I'd drive it until it blows chunks. It's only a 2000 after all. Then, I'd wait and see what the new Camry Hybrid brings into the fold in 2006 (or is it a 2007 model?) along with the 2006 Prius. That's what I am waiting for now and don't want to ditch my 1996 model until I see what the Camry rolls out as.

Fwiw, while sitting in the eye doctor's office I noted in Consumer Reports the Honda Accord Hybrid only gets 1 mpg better than their 4 cylinder model. Not worth it for the name Hybrid (26 mpg I think were the numbers). They reported it having vibrations on shifting from V-6 to 3 cylinders as well as electric to gas. Not good in my book, but Consumer Reports seemed to like it. Only good thing it was roomier and had better interior trim.

B~

But it has more power than their six-cylinder model.

[...]

• I listed a 1991 Mazda 626 on Craig's List for ,000 and had eight offers within a week.

earle

*

Well, throw this into the hopper (if you are in the US): $2000 tax credit through the end of the year; $500 next year. I gather this applies to when you TAKE DELIVERY.

(I am pondering these things too. Have put a refundable $500 on a loaded 2005, which should hit this area in ca 2 weeks and am, in the meantime, doing research. I also want to see the MSRP on this specific car, so I can figure out whether a surcharge was added.)

Tax exemption, not credit. You won't get $2000 off your taxes, but will instead get $2000 times your tax bracket. So, if you're in the 15% bracket, you'll get $300 off your taxes (if my arithmetic is correct).

Actually:

Clean Fuel Tax Deduction For Hybrid Vehicles

Tax Tip 2005-57, March 22, 2005

If you are the original (first) owner of a qualifying hybrid vehicle ? one that combines an electric motor with a gasoline-powered engine ? you may be eligible to claim a one-time tax deduction on your federal income tax return.

Under the Working Families Tax Relief Act of 2004, the deduction amount is limited to $2,000 for cars first put into use in 2004 and

2005. the deduction will be limited to $500 for vehicles placed in service in 2006, and no deduction will be allowed after that year.

Certain Toyota and Honda models qualify for the deduction:

Toyota Prius ? Model Years 2001 through 2005 Honda Insight ? Model Years 2000 through 2005 Honda Civic Hybrid ? Model Years 2003 and 2005 Honda Accord Hybrid ? Model Year 2005 Ford Escape Hybrid ? Model Year 2005 The deduction amount is $2,000 for cars first put into use before 2004. Under current law, the clean-burning fuel deduction will be reduced by $500 each year, starting in 2004, until it expires. No deduction will be allowed for vehicles placed in service after Dec. 31, 2006.

The deduction must be taken for the year in which the vehicle was first used (regardless of model year). For a car first put into use earlier than 2004 but for which the deduction was not yet taken, a taxpayer may claim the deduction on the ammended tax return, using Form 1040X, Amended U.S. Individual Income Tax Return. Taxpayers may ammend a previously-filed tax return to claim a refund within three years after the date they filed the original return or within two years after the date the tax was paid, whichever is later.

This benefit is taken as an adjustment to income. You do not have to itemize deductions on your tax return to claim it, but you do have to use Form 1040. Include your deduction on the dotted line to the left of line

35 of the 2004 Form 1040, and identify as ?Clean-Fuel.?

Federal tax law allows individuals to claim a deduction for the incremental cost of buying a motor vehicle that is propelled by a clean-burning fuel. Hybrid vehicles obtain greater fuel efficiency and produce fewer emissions than similar vehicles powered solely by conventional gasoline-powered engines. The deduction amount was set after the automotive corporations documented for the IRS the incremental costs of buying their hybrid vehicles.

For more information on the clean fuel deduction, see IRS Publication 535, Business Expenses. However, hybrid vehicles do not have to be owned or used by businesses to qualify for the deduction ? individual taxpayers may also take this deduction. Download Publication 535 or order a free copy by calling toll free 1-800-TAX-FORM (1-800-829-3676).

Links:

Publication 535, Business Expenses (PDF 422K) Form 1040, U.S. Individual Income Tax Return (PDF 176K) Form 1040X , Amended U.S. Individual Income Tax Return (PDF 110K) Subscribe to Tax Tips

Unfortunately, if you owe no one anything as I (everything clear and no loans or card debit), then $2000 won't amount to worth filing for (i.e. deductions for us don't affect our status or refund at all until we compile around $3500 or so of deductible expenses if I recall). Maybe we need some more deductions? Still it sounds good as a sales ploy, but it wouldn't work for us.

B~

Nope; it is an exclusion, not a true deduction, even though the IRS publication calls it a deduction. It does not go on Schedule A, but directly on the Form 1040 (line 34 in the 2004 return), and you get to take it regardless of whether you have enough itemized deductions to use Schedule A.

The Toyota Highlander Hybrid was added to the list qualified for the deduction this month.

Simple way to tell the US MSRP:

Go to

Fill in your ZIP code in the "Build and Price your Prius" box on the left side.

Pretend to build your car. Just don't do the last step and send the info out to your area dealers. You'll get the car's MSRP, the option package MSRP (and only the options available in your Toyota Region), and the MSRP of any additional accessories that you order (like floor mats).

and as others have pointed out, the US federal Clean Fueled Vehicle deduction is not a tax credit, but a reduction in your gross income (so you can take it whether or not you itemize, and the amount off your taxes is based on your tax bracket).

The new Energy Bill states: Hybrid gas-electric vehicles ($250-$3400 credit phased out after 80,000 vehicles per manufacture are sold including lean-burn diesel vehicles) as well as tax credits for fuel cell , advanced diesel, and alternative fuel vehicles.

Toyota has already hit the 80,000 mark, so there goes any tax incentive. I am not sure if the original step-down $500 amount will be allowed for

2006 with passage of the Energy Bill (once the MTBE liability issue gets settled).

Which energy bill is that?

Actually, the current law, as I understand it, has the 2006 tax credit pegged at $500. Originally, it was:

2003: $2,000 2004: $1,500 2005: $1,000 2006: $ 500

The Energy bill passed in 2004 changed 2004 and 2005 to $2,000, leaving

2006 at $500.

The current situation is a deduction of $2000 for purchases in 2005, and $500. The change was not in last year's energy bill. (I don't recall that bill ever passing...)

I haven't seen any info released by the IRS updating info for the newly passed energy bill's credits for hybrids. (It's been all over the news...

So, I'll assume that the US Federal Clean Fueled Vehicle Deduction isstill in place for now. The Clean Fueled Vehicle Deduction has kept moving out with different legislation.

Originally, it was $2000 in 2000 and 2001, dropping by $500 each year until phaseout in 2005. (so, $1500 in 2002, $1000 in 2003, $500 in

2004, and $0 in 2005.)

You can view the "important changes" section of the IRS Publication

535 "Business Expenses" for 2002 to see that new legislation was passed, changing the phaseout period for the Clean Fueled Vehicle deduction... The phaseout was supposed to start in 2004, with no deduction available for vehcles placed into service after 2006. (so, 2000, 2001, 2002, 2003 = $2000, 2004 = $1500, 2005 = $1000, 2006 $500, 2007 = $0.) In October of 2004, Congress passed the "Working Families Tax Relief Act of 2004," which extended the $2000 deduction out through 2004 and 2005, but made no change to the $500 amount for 2006 or the sunset ($0) in 2007. 0146,00.htmlhttp://www.irs.gov/newsroom/article/0,,id4549,00.htmlYou can also view it in the "What's New" section at the start ofchapter 12 of the 2004 IRS Publication 535: For information on how to file: consult the appropriate year IRS Publication 535 "BusinessExpenses" chapter 12, for information for individual filers ordifferent forms of businesses/corporations...)

All good information, but the $500 deduction will be replaced next year by the tax credit, which should work out to be a bigger tax break for most hybrid purchasers. Unfortunately, the credit is tied to the difference in mileage from the 2002 model year. This limits the Prius credit if they consider the Gen 1 2002 in the calculation. The Energy Bill seems to punish Toyota, since the credit will only be eligible to the first 60,000 hybrids by manufacturer after Jan. 1, 2006. I don't know how this will be tracked but my guess is that Toyota will let hybrid purchasers know by mid-year if the vehicle has a tax credit or not. I suspect Toyota will soften the blow by giving a partial rebate to those not eligible.

Bill