HALLIDAY & COMPANY is interested in helping you achieve your individual and business financial goals.  Understanding basic financial and tax concepts will help prevent costly mistakes and allow you to operate as efficiently as possible.  For this reason, we publish  “ACCOUNT-ABILITY” as a resource of helpful information, which we hope, will benefit you personally and/or as a business owner.

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This newsletter offers factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects.  No party assumes liability for any loss or damage resulting from reliance or use of this material.

HYBRID CAR TAX CREDITS FINALIZED FOR 2006

 March 2006 Continued

IRS has finalized the tax credits available for hybrid vehicles bought in 2006.  The amount of the tax credit depends on the vehicle’s fuel efficiency.

 

The Toyota Prius earns the largest tax credit for 2006 at $3,150.  Other vehicles are as follows: Toyota Highlander $2,600, Lexus RX400h $2,200, the two-wheel-drive Mercury Mariner and Ford Escape $2,600 (four-wheel-drive models get $1,950), Honda Civic $2,100, Honda Insight $1,450 and the Honda Accord $650.

 

However, you may need to purchase relatively soon before the tax credit phases out.  The full credit is available only until an automaker sells 60,000 hybrids (meaning 60,000 per manufacturer, not per model).  The phaseout begins on day one of the second full calendar quarter after the trigger is hit, with the credit cut in half.  So, for example, if Toyota’s cap is exceeded in June, buyers of Toyota hybrids will get 100% of the credit through September 30, 50% for hybrids bought in October 2006 through March 2007 and 25% for any hybrids bought from April 2007 through September 2007.  After that date, no credit would be available.

Flex plan deadline approaches

A deadline is approaching for many flex plan participants, they must clean out their accounts by March 15 or forfeit funds that are not used.  Last year the Internal Revenue Service (IRS) said that Flex Spending Accounts (FSA’s) could be amended to give participants 75 extra days after year end to use up amounts that were contributed for 2005.  Many plans adopted the IRS easing.