Have you gone green on your morning commute? Driven by a desire to protect the environment and taxpayers’ bottom lines, Congress passed the hybrid car credit in 2005. The credit, which is officially known as the alternative motor vehicle credit, is still with us today and can be a valuable addition to your Form 1040.
Cars eligible for the credit are usually hybrid cars that use a combination of ordinary fuel and battery power, like the Chevy Malibu Hybrid (Stock Quote: GM), or cars that use advanced lean burn technology, like the Volkswagen Jetta 2.0L TDI. A credit is also available for cars that use fuel cell technology. And if you decide to convert your gas guzzler into a plug-in penny pincher, a credit is available for that too.
As with any tax benefit, restrictions apply.
The credit is not available if you bought your hybrid used, and the full amount is only available if you buy your car before the end of the calendar quarter when the 60,000th car of your chosen model is sold. After that, the credit is reduced for the next fifteen months until it is no longer available. How will you know whether your new eco-friendly ride was one of those first 60,000 full-credit cars? Simply ask your dealership. The IRS will allow you to rely on your dealership’s statement unless they’re way off the mark.
Did your dealership forget to give you the information you need? You can find a list of the eligible cars and the amount of the credit for each car at the IRS web site. The deals include the 2008 Saturn Aura Hybrid (eligible for a $1,300 credit) the Honda Civic Hybrid (Stock Quote: HMC) (eligible for a $2,100 credit), the Ford Escape Hybrid(Stock Quote: F) (eligible for a $3,000 credit) and many others.
If you didn’t buy a hybrid car this year, don’t worry. The credit is available through 2010. That’s plenty of time to get your tax act in gear.
Looking for more tax savings? Be sure to check out the complete archive of Daily Deductions for more tax saving opportunities.