Summary of Federal Tax Incentives

[John Mitton]

I found the following PDF file out on the Internet, which I put up on my personal web site:
http://naturaldrive.com/docs/federal_tax_incentives.pdf

For the average consumer this means a $4,000 credit for a new Honda GX and zero for anything used. The credit may only be taken by the original purchaser of a CARB Certified natural gas vehicle in the first year that the vehicle is placed into service . The average consumer may also take advantage of the $1,000 tax credit for installing a home refueling appliance.Converting a vehicle to dedicated CNG use will also provide the $4,000 credit ($8,000 for a 3/4 ton vehicle), however it is necessary for the conversion to be done by an EPA certified facility using an EPA certified conversion kit. Conversions can run anywhere from $5,000 to $12,000 depending on the vehicle, so the federal credit alone will typically not cover the cost of conversion.

Also, note that if you owe any alternative minimum tax (AMT) you will get zero tax credits, unless the vehicle is used in part for business.
Please see:

http://www.irs.gov/pub/irs-pdf/f8910.pdf

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"If your vehicle was used only for personal purposes during the year, and you owe alternative minimum tax (for example, Form 1040, line 45, is more than zero), do not complete Form 8910 because your allowable credit will be zero"
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So the probably the best thing to do is:
1. Check with your tax adviser to estimate if you will pay any AMT this year (even one dollar will ruin the vehicle credit)
2. Buy/register all of your alternative fuel vehicles in a company name!

State Credits are described here:
http://www.eere.energy.gov/afdc/incentives_laws.html

[Curtis]

Federal Tax Credit

Qualifying alternative fuel vehicles (AFVs) purchased or placed into service between January 1, 2005 and December 31, 2010 may be eligible for a federal income tax credit of up to $4,000.
Vehicles placed into service before January 1, 2005 may be eligible for a $2,000 clean-fuel vehicle tax deduction.



AFVs Certified for the New Energy Tax Credit

Vehicle Make & Model

Fuel
Credit Amount

Honda

2005-08 Honda Civic GX

CNG

$4,000

Sources:
Honda Vehicles Certified to Operate on Compressed Natural Gas (IRS, July 11, 2006)

Honda Compressed Natural Gas Vehicle Certified for Tax Credit (IRS, Nov. 22, 2006)Alternative Fuels hide...To be eligible for this tax credit, the vehicle must only be capable of operating on any of the following alternative fuels:

• Compressed natural gas (CNG)
• Liquefied natural gas (LNG)
• Liquefied petroleum gas (LPG)
• Hydrogen
• Any liquid at least 85% methanol by volume

Additional RequirementsAdditional Requirements view...Additional Requirements hide...Additional vehicle requirements:

• It's original use commences with the taxpayer.
• It is acquired for use or lease by the taxpayer, and not for resale. (The credit is only available to the original purchaser of a new, qualifying vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.)
• It is used mostly in the United States.

IRS has yet to provide guidance on using credits to reduce alternative minimum tax liability and rules relating to recapture of credit (e.g., if the vehicle is re-sold). Claiming the CreditClaiming the Credit view...
Claiming the Credit hide...Fill out Form 8910, Alternative Motor Vehicle Credit.

For AFVs acquired for personal use, report the credit from Form 8910 on the appropriate line of your Form 1040, U.S. Individual Income Tax Return.
Other Tax Incentives hide...Some state and local governments also provide incentives for AFVs. Check with your state or local government or view the U.S. Department of Energy's list of State & Federal Incentives & Laws.
Other Tax Incentives hide...Some state and local governments also provide incentives for AFVs. Check with your state or local government or view the U.S. Department of Energy's list of State & Federal Incentives & Laws.
AFVs are not eligibe for electric vehicle tax credits.

Additional Information

• <LI class=spacedBullet>IRS Home Page
• Spotlight on... Energy Policy Act of 2005 Tax Credits (USDOE)

This information can be viewed directly at this link

http://www.fueleconomy.gov/feg/tax_afv.shtml

[c2sox]

Re: Federal Tax Credit

Wahoooo!!!!

I just got back from my tax person and I'm getting $3648 from the AMVC.
I have to admit that getting my Honda Civic GX is one of my better buys. The benefits of $12 to $16 fills, car pool lane access, my kids seeing me doing my miniscule part to help the environment and yes Curtis sticking it to foreign oil dependancy can't be beat.

The limited filling stations and frequent fill ups are a minor nuisance, I'm just glad to have several stations in my area. I just hope that we continue to see more stations open up, CE or not.

Now if the state can just send me my rebate check

[UpstateNY]

Re: Federal Tax Credit

I used Turbo Tax this year, My AFV Credit was reduced to 0, should have been $4,000 for my Civic GX. Something about the AMT calculation.

Has anyone else had this problem. This credit is not supposed to be based on income!!

[cngaz]

Re: Federal Tax Credit

AMT will wipe it out every time.

[John Mitton]

Re: Federal Tax Credit

My friend had the AMT problem but his tax adviser found a great way around it. Since the GX was used about 50% for his wife's home based business (Schedule C business where she must go out to visit clients -- keeping mileage logs of course) they were able to get a $2,000 credit.

[cngaz]

Re: Federal Tax Credit

List of current vehicles and what credit they qualify for-

http://www.irs.gov/businesses/article/0,,id=175456,00.html

[Curtis]

Re: Federal Tax Credit

I used Turbo Tax this year, My AFV Credit was reduced to 0, should have been $4,000 for my Civic GX. Something about the AMT calculation.

Has anyone else had this problem. This credit is not supposed to be based on income!!

Sometimes it doesn't pay to use a box instead of people. A good tax professional is worth their weight sometimes, particularly when there are loopholes, nooks and cranny's to be found. The AMT is a deal killer that your salesman should have mentioned... assuming he even knew about it. There may be a way to avoid it, as previously suggested, spend the money to consult someone, it could save you thousands.

There is pending legislation to kill the AMT, but it won't help us this year... if ever.

[xelgo]

Re: Federal Tax Credit

what is AMT?

[Curtis]

Re: Federal Tax Credit

AMT is "Alternative Minimum Tax". It is based on income level. If you ever paid it, you'd probably know it. It's basically a flat tax. It really screws up your ability to claim any credits. If you haven't paid it in the past and haven't had a significant change in income or tax status this year, you probably don't have to worry about it.

In all fairness, I am not a tax expert, so don't construe this as tax advice. Speak to your tax person... or box, as the case may be.