Answers on hybrid cars, gas allowance, and more

My May 25 column on hybrids led Jeff M. to ask, "Is it too late to get the 2006 tax credit for the Toyota Prius? Do only the first 60,000 units get the credit? Or does it last until October, as some car salespeople have mentioned? Is there any Web site that really explains the tax credit?"

For a succinct explanation, go online to http://www.irs.gov/newsroom/article/0,,id=157632,00.html. The Internal Revenue Service says taxpayers may claim the full credit ($3,150 in the case of the Prius) for hybrid vehicles purchased or put into service through the end of the first calendar quarter after the quarter during which each manufacturer's sales of hybrids (since Jan. 1) reaches 60,000. For the second and third quarters after that, taxpayers may claim half the credit. For the fourth and fifth quarters, taxpayers may claim 25 percent. No credit is allowed after the fifth quarter.

Important note: If you are subject to the alternative minimum tax, your credit will be substantially reduced or eliminated.

Toyota and Lexus (which are treated as one manufacturer) disclosed, obliquely, that their combined hybrid sales reached 60,000 in the second quarter of this year.

If you buy a Toyota or Lexus hybrid through September, you will be eligible for the full credit. The credit drops to 50 percent in the next two quarters, to 25 percent in the two quarters after that, and then to zero.

To find this well-hidden piece of information and a timeline, go to www.toyota.com. Put your cursor on Hybrids and use the drop-down menu to select Prius. Click on the words "federal tax benefits."

Arnold K. asks, "Given the increase in gasoline prices, would you know whether and, if so, when it is likely that the IRS will be raising the gas allowance?"

IRS spokesman Jesse Weller replies, "We have not made any adjustments to the standard mileage rates this year, and typically we only make such adjustments once a year."

Gas prices are only one component that goes into the mileage calculation. Others include new-car prices and insurance.

The standard mileage rates for business, medical and moving purposes are based on an annual study done for the IRS by Runzheimer International. The rate for charitable miles is set by statute. The business standard mileage rate can be used in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse employees for mileage.

Shortly after Hurricane Katrina, the IRS took the unusual step of adjusting the 2005 rates for the last four months of the year.

The 2006 standard mileage rates are 44.5 cents per mile for business expenses, 18 cents for moving and medical expenses and 14 cents for charitable expenses (except for Katrina-related charity work, which is 32 cents.)

Grace D. writes, "Thanks for the columns (June 13 and 15) on college-loan consolidation. Do you have any kind of list that compares lenders, rates, pros and cons?"

I don't think what Grace is looking for exists, but for information on the U.S. Department of Education's direct-lending program, go to www.ed.gov/offices/OSFAP/DirectLoan/index.html.

For a list of private-sector lenders, including rates and terms, go to www.finaid.com/loans/educationlenders.phtml.

For a calculator that lets you compare the monthly payments, interest rates and total cost of your current loans with the monthly payment, interest rate and total cost of a consolidation loan, click on www.finaid.org/calculators/loanconsolidation.phtml.

Sites such as consolidationcomparison.com let you compare loans from many lenders, but only ones that pay a listing fee.

P.S. Congress recently repealed the single-holder rule that prevented some borrowers from shopping around for a consolidation loan. Anyone who has a federally guaranteed Stafford or Plus loan can now consolidate with any qualified lender.

(E-mail Kathleen Pender at kpender(at)sfchronicle.com.)

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)

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