TaxAlmanac:Featured article/July 27, 2005
From TaxAlmanac
Clean-Fuel Deduction
The original purchaser of a qualifying hybrid gas-electric car may deduct $2,000 for the year the vehicle is first used, if that year is before 2006. In 2006, the deduction is scheduled to drop to $500.
These vehicles qualify for the clean-fuel vehicle deduction:
- Lexus RX 400h — Model Year 2006
- Ford Escape Hybrid — Model Year 2005
- Toyota Prius — Model Years 2001 through 2005
- Honda Insight — Model Years 2000 through 2005
- Honda Civic Hybrid — Model Years 2003 and 2005
- Honda Accord Hybrid — Model Year 2005
Deduction for nonbusiness clean-fuel vehicle property by individuals. Individuals can claim the deduction for clean-fuel vehicle property used for nonbusiness purposes by including the deduction in total adjustments on Form 1040, and by entering “Clean Fuel” and the dollar amount on the dotted line next to the total adjustments line. If the vehicle is used partly for business, see the next two discussions.
Deduction for business clean-fuel vehicle property by employees. Employees who use clean-fuel vehicle property for business, or partly for business and partly for nonbusiness purposes, should include the entire deduction in total adjustments on Form 1040, and enter "Clean Fuel" and the dollar amount on the dotted line next to the total adjusments line.
