Rest again peacefully

When I decided to buy a Toyota Prius, it was a combination of consumerism and a desire to make a change to better the world. I had a choice between buying and leasing. If I bought the car, I assumed I got a really nice tax cut. If I leased the car, I didn’t have to worry about the electrical problems that tend to plague hybrids (to the cost of about $2500) after 2-3 years. Either way you looked at it, it was about a $2,000 benefit, so I chose to buy the car, take the tax credit, and pray that I didn’t have to pay out of pocket for electrical problems.

I bought my car in May of 07 and was all pumped up about the tax credit. I was really happy that our government was rewarding consumers for making better choices. Ideally, we wouldn't need the encouragement, but I liked the idea that the government rewarded forward thinking choices. Then, Villi bought her Prius in September and when she researched the credit, she found out that it didn’t apply to her. I didn’t understand why, so I did some research. The tax credits only applied to the first 60,000 units of a vehicle sold. By 2006, Toyota had moved 60,000+ Prius’, so the government was slowly phasing out the credit for consumers. Instead of $2500, I would get 787 and none for Gretchen Wieners Villi gets nothing.

People, however, buying the new Chevy Tahoe Hybrid, which still only gets 21 MPG, get the full credit. DUH! This was never meant to be a consumer centered credit. It was entirely an incentive to get businesses to make hybrids. This was the government’s way of helping manufacturers get 60,000 customers through the door for any car they decide to make into a hybrid. People choosing the Prius for its gas mileage are penalized while people with SUVs get the credit. Annoyed!

I did my taxes today. I had been waiting for taxcut online to get form 8910 uploaded so I could claim my partial credit on my Prius. Every time I checked the site, up to and including today, taxcut told me that the form wasn’t ready and to check back after mid-JANUARY to see if the form was ready. Yesterday, I asked The Google when that form would be ready and found out that people using Turbo Tax had already successfully filed their hybrid tax credits. I decided to drop H&R Block and go with Turbo Tax. When Turbo Tax imported my federal information into my state form, I got a nice little surprise; colorado also has an alternative fuel tax credit.

Colorado’s credit is not limited by the number of cars sold. Instead, you get a credit to apply to your tax liability (tax owed) in the state of Colorado. What that meant for me is that I had a liability of 1995 and an available credit of 3000 for my Prius. It wiped out my tax liability, and I get all the money I paid into the state back as a refund. Additionally, any leftover credit can be applied to future tax liabilities over the next 5 years. That means that I should have a built in credit of about $1000 towards my state taxes next year. Yahoo!

I was feeling a little cheated by the federal government. In turn, I felt liberal guilt for feeling cheated, since the good deed should be its own reward. That combination I mentioned earlier (consumerism and a desire to make a change to better the world) reared its head again, this time as a conflict. But now, with my state taxes filed and my refund on the way, I am feeling much better about all of it.