Weighing the tax advantages of Toyota's hybrid car

Q: I am thinking about buying a Toyota Prius hybrid car. I understand there is a federal tax break, but I need to locate tax law 179a. Where do I get it?
M.L.B., via, e-mail

A: First, check with your state's tax department to see if you qualify for a state credit or deduction for electrically powered vehicles, says a Toyota spokesperson. Some states provide them directly, others don't.

On the federal level, the US tax code contains a complicated set of credits and deductions for electrically powered and clean-fuel vehicles.

A Toyota spokesman says you can get a limited income credit for the Prius, which uses both a 1.5-liter gas engine and an electrical motor.

But a spokeswoman with the IRS says credits are only available for wholly electric vehicles. The good news, she says, is that you likely qualify for a deduction of up to $2,000 for using a "clean fuel" vehicle. To determine how to capture the best possible tax break, call the agency at 800-829-1040 and ask for a "technical" representative who deals with clean-fuel vehicles and property. Also, see publication 535 on the IRS website (www.irs.gov).

Q: I filed our 1040 tax form as "married, filing jointly." But now I find that I cannot claim my education credit, nor the full amount of the spousal deduction, or contribute toward a Roth IRA. Can I amend, with the new return using married filing jointly? My only alternative is to claim "head of household." I support both of us financially, but am a full-time student.
G.D., via e-mail

A: Of course, you can amend your return using the same filing status. But be careful when using a different status. According to J.K. Lasser's "Your Income Tax 2001," the filing status "head of household" has very strict requirements, including that you, if married, were living apart from your spouse for the last half of 2001, and that your household included a child, adopted child, stepchild, or foster child.

Couples can also file "married, filing separately," but the tax rates are higher than for married couples filing jointly. Call the IRS at 800-829-1040, to determine your best filing status.

In addition, an IRS spokesman urges that your amended return be filed as soon as possible, to avoid possible fines and penalties.