Purchase a new, clean-fuel hybrid vehicle. A qualifying vehicle must have a drive train powered by an internal combustion engine and a rechargeable battery.
Buy early. You can only claim the full amount of the deduction up to the end of the first calendar quarter after the quarter in which the manufacturer sells its 60,000th hybrid vehicle. The credit is reduced to 50 percent for the second and third quarters and 25 percent for the fourth and fifth quarters, after which it disappears.
Fill out IRS Form 8910 (Alternative Motor Vehicle Credit). Figure the business/investment portion of the clean fuel credit on line 10. Figure the personal-use part of the credit on line 18.
List the business/investment portion of the credit from Form 8910 on Form 3800 (General Business Credit), line 1v. Complete Form 3800 to figure your credit. List your allowable credit from line 19 on Form 1040, line 55.
Enter the personal use portion of the credit on Form 1040, line 55.
Find the allowable credit for various models of hybrid cars on the IRS website (see Resources below).
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