[jrod81]

Hey guys,
We bought an 07 Hybrid on Saturday. They had them discounted to get rid of all 07s so I feel we got a decent deal. One of the final things that made our decision was the promise of a $2100 tax credit.
Here is my question:
I am working on a graduate degree and my wife works at only $12.00 an hour so we are still in the tax bracket where we have yet to pay in for taxes (sorry if that steams anyone). My dealer told me that if I owed $4100 then the tax credit would make me only owe $2000 but I told him we never owe and asked him if we were going to get $1000 back, would we instead get $3100 back because of the credit. He answered yes without hesitation... is that correct?
thanks
jared

 

[NIGHTHAWKSI]

your talking about tax credit....you will get your money back come april/may 2008.

 

[jrod81]

yeah i realize that it will be april, but what i was trying to ask was do i get $2100 back even if i don't owe anything in?

your talking about tax credit....you will get your money back come april/may 2008.

 

[NIGHTHAWKSI]

yea, it will be a tax refund...alot of people file their taxes and get a refund.

 

[GoHuskies]

Yep. You have to wait till next year lol.

I'm still a dependent so I'm not sure but I think we had to do some extra paperwork when filing taxes.

 

[jrod81]

i have always got a refund since graduating college... typically around $800 or so... so does that mean that i will get the usual $800 and then an additional $2100 on top of that?

 

[NIGHTHAWKSI]

^lol, when it comes to tax refunds, there is no "usual". there are ALOT of factors that determine your refund.
but yes, you will receive your 2100 on top of your regular refund.

 

[jredison]

i have always got a refund since graduating college... typically around $800 or so... so does that mean that i will get the usual $800 and then an additional $2100 on top of that?

Not necessarily.

The tax credit for the hybrid is a non-refundable credit. Therefore, it will reduce your tax liability to zero but not below it. So if your tax liability has been zero in the past (if you always get everythiing back that you paid in), then the hybrid credit won't really help you.

Your dealer was incorrect in telling you that you would receive it as a refund. If I were you, I'd go back and ask him if he would be willing to give you the $2,100 if (and when) he is proven wrong.

And yes, I am an accountant and I do prepare taxes for a living.

If you have any more questions, feel free to ask.

Brian

 

[NIGHTHAWKSI]

^+1 for you.
so basically, if your in the whoel with the government and owe them money, they will decrease teh amount you owe, but if you owe nothing and are entitled to a refund, you dont get your $2100 that your entitled to?

 

[jredison]

^+1 for you.
so basically, if your in the whoel with the government and owe them money, they will decrease teh amount you owe, but if you owe nothing and are entitled to a refund, you dont get your $2100 that your entitled to?

You got it.
:xyxnervou

 

[NIGHTHAWKSI]

^wow, they really try to rip people off any way possible. god forbid they ever have to pay some one, they have a loophole. but if you decide not to pay themhnoes: :xyxnervou

 

[jredison]

About 80% of my day at work is spent on helping clients that owe the IRS money. I work on trying to get settlements and payment plans while trying to keep the IRS from taking their bank accounts or paychecks.

It's actually quite fun

 

[NIGHTHAWKSI]

^lol, i need to make an appt. with you.
too bad i dont live closer.

 

[jredison]

Feel free to PM me
I'll give you my contact info.

We can do everything via fax, phone, mail and email

 

[NIGHTHAWKSI]

pm sent

 

[jrod81]

man that sucks. i was counting on that $2100. that is part of what made me decision. i know there is no way i will get that money from the dealer, yeah right.

 

[jredison]

man that sucks. i was counting on that $2100. that is part of what made me decision. i know there is no way i will get that money from the dealer, yeah right.

Yeah, I wouldn't expect it from the dealer either. I really wish they wouldn't give out tax advice without knowing the facts. Especially since it influenced your decision to buy.

 

[jasonandre]

A tax credit lowers your tax bill dollar for dollar.

A tax deduction shaves money off your taxable income, so the value depends on your tax bracket.

For example, if you're in the 25% tax bracket, a $1,000 tax deduction lowers your tax bill by $250. But a $1,000 tax credit lowers the bill by the full $1,000, no matter in which bracket you are.

So if you don't pay taxes at all, you will still will not receive anything extra.

Probably more info than you needed, but what the hell.

 

[jrod81]

it's not more than i wanted to know, but i will say my spirits are a bit defeated, the trip to paris is off i guess... man she will be sad too

 

[jredison]

Is your tax liability normally zero? (i.e. - do you get all of your withholding back as a refund?) If not, you will get some benefit from the credit.

again, depending on your situation, you may benefit somewhat from the credit but it still sucks that the sales person basically lied to you.