New Deductions for Hybrid and Clean Fuel Vehicles

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Tax season is upon us and Americans' are looking for new deductions in order to maximize this years tax return. Tax payers are allowed a tax credit for certain hybrid vehicles purchased and put in use after 12/31/05 and before 12/31/10. This tax credit is referred to as The Energy Policy Act of 2005 and replaced the clean fuel burning deduction.

Tax season is upon us and Americans' are looking for new deductions in order to maximize this year's tax return. Tax payers are allowed a tax credit for certain hybrid vehicles purchased and put in use after 12/31/05 and before 12/31/10. This tax credit is referred to as The Energy Policy Act of 2005 and replaced the clean fuel burning deduction.

Full credits are only available for a limited amount of time after purchase of the hybrid vehicle. The credit should be submitted before the end of the second quarter after the quarter the manufacturer sells its 60,000th of that particular model. Basically, a full credit is only available for a limited time after purchase, after that point, the credit goes down to 50% after the third quarter and then down to 25% after the fourth quarter. No credit is allowed after the fifth quarter after the 60,000th sold. A credit is only available for the original purchaser of the vehicle--this is a one time credit. This tax credit depends on the make and year of the vehicle, a full list of vehicles and credits available is accessible on http://www.irs.com.

"To utilize this credit, tax payers should refer to the hybrid automobile make and model list. This information is easily accessible and updated on irs.com," states IRS.com representative Robert Hoult. The tax credit may be anywhere between $400 to $3400 depending on the make and year. Tax payers are required to fill out the full version of Form 1040.

Updated tax information, tips and essential forms are readily available on the irs.com website. Please visit http://www.irs.com for updated information.

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