$2,000 Tax Deduction For Clean-Fuel Vehicle Credit
Filed Under Clean Fuel Vehicle Credit, Tax Deductions, Tax Returns | Leave a Comment
$2,000 Tax Deduction
The certification means taxpayers who purchase any of these new hybrid vehicles may claim a tax deduction of up to $2,000 for tax year 2005.
(The deduction started off as $2,000 in tax year 2002 and reduced to $1,500 for tax year 2004 and raised again for 2005.)
You can claim a deduction for the incremental cost of buying a motor vehicle that is propelled by a clean-burning fuel - which typically refers to vehicles that are commonly known as “hybrids”.
By combining an electric motor with a gasoline-powered engine, these hybrid vehicles obtain greater fuel efficiency and produce fewer emissions than similar vehicles powered solely by conventional gasoline-powered engines.
How To Claim
You must use Form 1040, not one of the shorter forms, to claim this deduction.
You should put “Clean-Fuel” and the deduction amount on the dotted line to the left of line 35, including this amount in that line’s total adjustments to income.
(You would have used line 33 on the 2003 Form 1040; line 34 on the 2002 form; line 32 the previous two years.)
Claiming A Deduction For Earlier Years
Qualifying individuals who did not claim the deduction when they filed may claim it on an amended return (Form 1040X). Generally, taxpayers may amend returns up to three years from the original return’s due date.
Qualifying Vehicles
The IRS has certified the following vehicles as being eligible for the clean-fuel vehicle deduction:
Ford Escape Hybrid — Model Year 2006
Mercury Mariner Hybrid — Model Year 2006
Lexus RX 400h — Model Year 2006
Ford Escape Hybrid — Model Year 2005
Toyota Prius — Model Years 2001 through 2006
Toyota Highlander Hybrid — Model Year 2006
Honda Insight — Model Years 2000 through 2005
Honda Civic Hybrid — Model Years 2003 and 2005
Honda Accord Hybrid — Model Year 2005
Find out more about tax savings at www.taxassistonline.com
Watch Out For Tax Scams!
Filed Under Tax News, Tax Returns, Tax Scams | Leave a Comment
www.taxassistonline.com keeping you up to date with tax news and tips.
In TAX TIP 2006-24 the IRS Warns Taxpayers To Beware of Tax Scams
Tax scams can take several forms, ranging from the promise of a large tax refund to the promotion of illegal ways of “untaxing†yourself.
-
Believe me, a few extra dollars is absolutely not worth the pain of the IRS chasing after you for years on end!
Here are some of the common schemes you should beware of:
Return Preparer Fraud:
Dishonest tax return preparers can cause many headaches for taxpayers who fall victim to their schemes.
Basically these preparers get their financial gain by skimming a portion of your refunds and by charging you inflated fees for return preparation services.
They will try to attract you by promising large refunds which may be dubious.
Remember: No matter who prepares your tax return you are ultimately responsible for its accuracy and for any tax bill that may arise due to a questionable claim.
So choose carefully when you hire a tax preparer, because if what they are offereing sounds too good to be true, it probably is.
Identity Theft:
Take care when disclosing your personal information. The IRS is aware of several identity theft scams involving taxes or scammers posing as the IRS itself.
Identity thieves have posed as IRS employees and then used stolen personal data to access financial accounts, run up charges on credit cards and apply for new loans.
The IRS does not use e-mail to contact taxpayers about issues related to their accounts. If you have any doubt whether a contact from the IRS is authentic call 1-800-829-1040 to confirm it.
Frivolous Arguments:
Promoters of dubious tax schemes have been known to make various outlandish claims such as:
- the Sixteenth Amendment concerning congressional power to establish and collect income taxes was never ratified;
- that wages are not income;
- that filing a return and paying taxes are merely voluntary;
- and that being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy.
These are all mad and bad, so don’t believe these or other similar claims. The arguments are false and have already been thrown out of court.
As a taxpayers you have the right to contest your tax liabilities in court but no one has the right to disobey the law and if you do - deliberately or otherwise - it will cost you dollars and pain.
Three important lessons to remember:
1. You are responsible and liable for the content of your tax return.
2. Anyone who promises you a bigger refund without knowing your tax situation could be misleading you, and
3. Never sign a tax return without looking it over to make sure it is accurate.
Click here for more information about tax scams and other useful tax tips from the IRS.