Get Tax Credit For New Car Purchase
It is possible to get a tax credit for a new car purchase for the 2010 tax year. Before you go out and buy a new model, however, it is important to find out the guidelines and restrictions your purchase needs to meet before you can take advantage of this credit. The Internal Revenue Service (IRS) has issued specific regulations that apply to this provision, called the Alternative Vehicle Credit. These guidelines explain what types of new cars qualify for this credit, when the purchase must be made and the amount of any eligible credit that can be claimed.
Things you'll need:
- Eligible hybrid/plug-in electric vehicle
- Form 1040 & 8910
- Purchase an eligible hybrid vehicle. The Alternative Vehicle Credit is only available for qualified purchases of hybrid or plug-in electric vehicles. To clarify which vehicles are eligible, the Internal Revenue Service posts a list of the eligible cars from 2005 through 2011. Look at this list carefully before making your purchase. If you have already purchased one of these vehicles, check the model year to make sure it is eligible for this credit. This tax credit will no longer apply for most passenger-sized hybrid vehicles in 2011, so the provision will generally apply to vehicles that been purchased in 2010 or earlier.
- File your income tax return using Form 1040. In order to claim The Alternative Vehicle Credit, you must file your income tax return using IRS Form 1040. Taxpayers who file Form 1040A or Form 1040EZ will not be able to claim this credit. Prepare your Form 1040 through line 46 to calculate the amount of tax you will owe this year. This credit will be used to reduce the amount of tax you owe dollar for dollar.
- Complete Form 8910 to calculate the amount of your tax credit. Fill out Form 8910 and be sure to read the form directions carefully. Begin by entering the vital information about the vehicle, including the model, make and year, and then proceed down the form, completing the personal and business sections. It's important to remember that the "tentative credit" amount that you arrive at in Section One is merely the amount of credit that is available to you. You will calculate the actual amount of credit you can claim in Section 3.