Vehicle Tax Credits: Not Just for Hybrids Anymore

written by Cara Stewart

Move over hybrids - buyers of Volkswagen and Mercedes diesel vehicles now qualify for the valuable alternative motor vehicle tax credit. Previously, only hybrid vehicles, fuel cell vehicles, and alternative fuel vehicles had been certified, but now certain advanced lean-burn technology vehicles, which generally run on diesel fuel have been certified.

Qualifying vehicles

The qualifying vehicles and their credit amounts are:

• 2009 Volkswagen Jetta 2.0L TDI Sedan manual or automatic — $1,300

• 2009 Volkswagen Jetta 2.0L TDI SportWagen manual or automatic — $1,300

• Mercedes GL 320 BLUE TEC — $1,800 • Mercedes R 320 Blue TEC — $1,550

• Mercedes ML 320 Blue TEC — $900

The alternative motor vehicle tax credit

The alternative motor vehicle tax credit was enacted by the Energy Policy Act of 2005 under Internal Revenue Code Section 30B and is a lucrative tax credit for purchasers of qualifying automobiles. For a taxpayer to claim the credit, the original use of the vehicle must begin with the taxpayer and the vehicle must be acquired for use or lease by the taxpayer and not for resale. Just as the situation is with hybrids, the full amount of the credit for each vehicle is available only during a limited period.

Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th hybrid passenger automobile or light truck or advanced lean-burn technology motor vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter. The credit - as Congress has allotted so far - may only be taken for qualified vehicles purchased before the end of 2010.

Additional information regarding this tax credit can be found at www.irs.gov or contact The Whitlock Company at 417-881-0145 for assistance.www.irs.gov