Park a clean-fuel deduction on ’05 return — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
What the tax law takes away with one hand, it often gives with the other. Case in point: The 2005 tax year is the final year in which you can take a tax deduction for certain environmentally sound vehicles. But that write-off has been replaced in tax year 2006 with a series of tax credits approved in last year’s energy law.
Advice: Follow the “old” rules when claiming the $2,000 clean-fuel deduction for a qualified vehicle placed in service in 2005. To qualify, you must purchase the car new. The IRS allows you to take clean-fuel deductions for the following vehicles:
• 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 year 2005, 2006 • Toyota Highlander Hybrid: model year 2006 • Honda Insight: model year 2005 • Honda Civic Hybrid: model year 2005 • Honda Accord Hybrid: model year 2005
Logistics: To claim the deduction, put “Clean-Fuel” and the deduction amount on the dotted line alongside Line 36 of your 1040