Some "green" cars still qualify for tax credits

If you're shopping for a new auto for yourself or your business, you may be wondering if the federal government still offers incentives for "green" cars. The answer is yes, in the form of credits you can use to directly reduce the amount of income tax you owe — but only when you buy certain vehicles. Here's an overview.

• Plug-in electric drive motor vehicle. This credit was extended for vehicles purchased through 2016, and includes cars, light trucks, and motorcycles. In general, the vehicle must be under 14,000 pounds and powered by a rechargeable electric motor. Depending on the size of the battery, the credit can be as much as $7,500 for vehicles with four wheels. For two-wheeled highway-use vehicles, the credit is 10% of the cost, up to a maximum of $2,500.

• Fuel cell motor vehicle. The alternative motor vehicle credit is available for fuel cell vehicles for 2015 and 2016. Fuel cell motor vehicles are powered by cells that convert chemical energy into electricity. The base credit is $4,000 for vehicles weighing less than 8,500 pounds.

To take advantage of these credits, you need to be the original owner of a new qualified vehicle you've purchased and placed in service during the tax year. How do you know if the vehicle is qualified? The manufacturer certifies eligibility with the IRS, and you should be able to obtain and rely on a copy of the IRS letter acknowledging the certification.

You may also be able to claim an alternative fuel vehicle refueling property credit if you buy and place in service equipment such as a recharging station for your vehicle. Contact us for details about these and other available energy credits.

"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
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Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720
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