Federal Tax Credit

[Smartshot]

Is the federal tax credit income dependent. Nissan advertises the the federal tax credit amount is a range of Zero To $7,500. Why is it a range? Is it based on your income then? Does this mean that the greater your income the smaller the credit?

[lpickup]

Is the federal tax credit income dependent. Nissan advertises the the federal tax credit amount is a range of Zero To $7,500. Why is it a range? Is it based on your income then? Does this mean that the greater your income the smaller the credit?

Actually it's usually the opposite. Basically you have to owe that much in taxes in the first place to get the full amount back. So if you only have $3000 tax liability, for example, you will only get $3000 back. Those with lower incomes tend to have smaller tax liabilities and therefore can't take the full credit.
As for the credit itself though, it is not tied to income. Just battery size, and the LEAF has a large enough battery that it qualifies for the entire credit.

[harryjpowell]

There are a number of other threads but here's what the IRS did to me. Line 54 was 7500

Letter from the IRS said " We changed the total credits on line 54 of your 1040. Some credits are limited to the difference between your tax before credits and the tentative minimum tax from Form 6251, AMT-individuals. Although you were not liable for this additional tax, your credits were still subject to the limitations."

I've redone my return a number of times and didn't owe any AMT but they reduced my 7500 credit to under 3k

My 2cents

[UkrainianKozak]

Is the federal tax credit income dependent. Nissan advertises the the federal tax credit amount is a range of Zero To $7,500. Why is it a range? Is it based on your income then? Does this mean that the greater your income the smaller the credit?

IRS credits back your taxes, so it actually works in reverse from what you said. If you don't have to pay more that $7500 in taxes for reported year, the less you earn, the less will be the credit.
Basically if you don't have to pay $7500 in federal taxes, IRS won't give you money, they can only let you pay less (by no more than $7500)
Lookup form 8936 on IRS website for more details about calculation.
you copy line 46 from 1040, less other tax credits claimed on 1040, if it is more than 7500, you claim 7500 credit, if it is less, no taxes that year (but it'll be less than 7500 refund)
Basically if your 1040 sais that you have to pay 7500 or more, you are fine. If less, you basically don't have to pay any taxes that year.

P.S. I'm not a tax adviser, so don't sue me

[Cheezmo]

What I (and some others) have done is lease it instead.

Nissan gets the full tax credit, and the lease is based on the reduced cost. So even if you buy the car at the end of the 3 years, you will have taken advantage of the credit.

With the rate the technology is changing, and the tax credit (I would not have gotten any if I had bought it), the lease was a no brainer for me. Only problem now is that it may be tough to stay under 12,000 miles a year since we love it so much. If that doesn't happen, may buy it at the end of the lease after all.

[baronvonshush]

Letter from the IRS said " We changed the total credits on line 54 of your 1040. Some credits are limited to the difference between your tax before credits and the tentative minimum tax from Form 6251, AMT-individuals. Although you were not liable for this additional tax, your credits were still subject to the limitations."

I've redone my return a number of times and didn't owe any AMT but they reduced my 7500 credit to under 3k

Yikes. I would definitely give them a call and try to clarify the situation ASAP. The IRS itself says that AMT (and therefore tentative minimum tax) should not affect the credit:
http://www.irs.gov/newsroom/article/0,, ... 71,00.html" onclick="window.open(this.href);return false;

Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed Against AMT (Section 1144): Starting in 2009, the new law allows the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, to be applied against the Alternative Minimum Tax. Prior to the new law, the Alternative Motor Vehicle Credit could not be used to offset the AMT. This means the credit could not be taken if a taxpayer owed AMT or was reduced for some taxpayers who did not owe AMT.

Sounds to me like someone at the IRS didn't get the memo in 2009.

[TEG]

There are a number of other threads but here's what the IRS did to me. Line 54 was 7500

Letter from the IRS said " We changed the total credits on line 54 of your 1040. Some credits are limited to the difference between your tax before credits and the tentative minimum tax from Form 6251, AMT-individuals. Although you were not liable for this additional tax, your credits were still subject to the limitations."

I've redone my return a number of times and didn't owe any AMT but they reduced my 7500 credit to under 3k

My 2cents

???

I thought this credit was NOT subject to AMT limitations at all !

[planet4ever]

Line 54 was 7500. Letter from the IRS said " We changed the total credits on line 54 of your 1040. Some credits are limited to the difference between your tax before credits and the tentative minimum tax from Form 6251, AMT-individuals. Although you were not liable for this additional tax, your credits were still subject to the limitations."

As others have said, it is not supposed to work that way, unless there is something else going on that you are not telling us.

1. Verify that line 46 is at least 7,500. If not, that is the real reason for the limitation, and the IRS just gave you the wrong reason.
2. Verify that line 53c is checked and that 8936 is next to the check box. If not, you made an error in filling the form, or you did something that confused your tax program, and that has confused the IRS.
3. Verify that line 53 (to the right of the check box and the 8936) says 7,500.
4. Check that nothing else is being claimed on lines 47 through 53. If anything else is, that may be the reason for the restriction.

Back to Smartshot's original question, lpickup answered it correctly, but just to clarify, your tax liability is not limited to what you pay on tax day; it is everything you owe for the year. For many people, most or all of that has been taken out of paychecks during the year. As an example, if you have $9,000 withheld during the year and you would normally get a $500 refund, your liability is $8,500 ($9,000 - $500). You can claim the whole $7,500, and get $8,000 back ($500 + $7,500) the spring after the year in which you buy the LEAF.

Ray

[EVDRIVER]

There are a number of other threads but here's what the IRS did to me. Line 54 was 7500

Letter from the IRS said " We changed the total credits on line 54 of your 1040. Some credits are limited to the difference between your tax before credits and the tentative minimum tax from Form 6251, AMT-individuals. Although you were not liable for this additional tax, your credits were still subject to the limitations."

I've redone my return a number of times and didn't owe any AMT but they reduced my 7500 credit to under 3k

My 2cents

If you did your own taxes you may want to seek professional advice for a second look.

[coqui]

Professional advice doesn't always work, btw. My tax preparer, who is using a software package I am not familiar with, had no experience with Form 8936. When she first completed it, her software showed a credit for me GREATER than $7,500 I had to show her places in the IRS website that talks about the $credit per kWh for the Leaf's battery size (the battery size is large enough for the entire credit). She agreed with me and overrode her software and voila I got the full $7,500.

If you did your own taxes you may want to seek professional advice for a second look.