There are a few more unexpected credits that the IRS has arranged for its citizens. Apart from the obvious credits, IRS in order to promote the better lifestyle to its people has come up with some unexpected credit types. Time and again they have been coming up with various newer types of credits.
Till date the distinctive types of credits offered are:
• Alternative motor vehicle credit: This is credit assigned with the motive of promoting use of alternative fuel for vehicles. It is non refundable credit and the vehicle should have been purchased after 1st January 2006 for this credit to be applicable. The allowable tax credit is $400 to $4000 depending upon the fuel economy. The IRS has listed out the vehicles which are qualified as alternative motor vehicle. You receive a certificate from the manufacturer informing that the vehicle is a qualified vehicle. Even the calculation of the amount of credit is not that easy, you need to report and calculate the credit on Form 8910.
• Plug-in electric vehicle Credit: The vehicles which use external electric source to get the propulsion energy are termed as PEV. Buying a PEV qualifies you to avail a PEV credit. The available credit is 10% of the cost of vehicle to the extent of an amount that is changed by the IRS after some years. You need to have a manufacturer’s certificate to claim for the credit.
• First time home buyer credit: The government, in order to encourage people to have their homes, had introduced the first time home buyer credit. To avail this credit you should not have purchased a home in the preceding three years of your purchase of the new home. It should be your primary residence. There is a maximum limit for the incomes to be able to claim the credit. Generally, you can claim 10% of the property price as the credit, but there are certain maximum limits that are set by the IRS.
• Making Work Pay Credit: If you have earned income from your work you can claim a credit of 6.2% of your earned income. The maximum being $400. If your AGI increases certain maximum limit set by the IRS then your credit amount decreases.
The IRS is a very sagacious organization. It puts the taxpayers in the perfect tax bracket so that they cannot claim the unnecessary deductions on their AGI. It understands the purchasing power of the taxpayers and accordingly cuts down the credit limit they can claim. But even we can be smart enough and try and understand all the possible credits available and try to fit our AGI into a bracket that can provide us maximum credits and deductions.
