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1. Take deduction in year vehicle was originally purchased,and
2. Be original owner, of vehicle.
Importantly, you do not have to itemize your deductions to take advantage of Clean-Fuel deduction. If you are using basic 1040 form for filing your taxes, simply write "clean fuel" on line 33 and take deduction. Make sure you review instructions for form 1040 to correctly claim deduction. The process is exceedingly simple.
It should be noted that Clean-Fuel Vehicle deduction is a one-time deduction. Further, deduction is only available on your federal tax return, not your state filing. Since deduction will affect your adjusted gross income, however, you should see an additional saving on your state tax return since your adjusted gross income will be reduced. If you have already filed taxes for year in which you purchased a clean-fuel vehicle, you should consider amending your tax returns to claim deduction.
Richard Chapo is CEO of Business Tax Recovery - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.