Unfortunately, As of July 1st, 2017, it looks like the California rebate is limited to qualified low and moderate income applicants only:
Clean Vehicle Rebate Project
I imagine most Tesla buyers won't qualify for the California credit as a result
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2017 Model S 75D
- Thread starter Mrwatchdawg
- Start date
Unfortunately, As of July 1st, 2017, it looks like the California rebate is limited to qualified low and moderate income applicants only:
Clean Vehicle Rebate Project
I imagine most Tesla buyers won't qualify for the California credit as a result
Great looking car too bad you bought it at such a high price. The market rate for your car should be between 78-80k.
By the way, California classifies car tax as a "use tax" so it's not necessarily double taxation. It's just another way for California to generate additional revenue without dubbing it as sales tax.
By the way, California classifies car tax as a "use tax" so it's not necessarily double taxation. It's just another way for California to generate additional revenue without dubbing it as sales tax.
For all those with less than $7,500 in taxes who can still afford a Tesla, please post the name of your tax accountant.
WCM3
Member
haha secret
I guess I really meant that it's not really a discount because you can't directly apply it to the purchase price. It's not like I get a check in the mail for $7500 and then I can put that directly towards my loan.
stan23
Member
haha secret
I guess I really meant that it's not really a discount because you can't directly apply it to the purchase price. It's not like I get a check in the mail for $7500 and then I can put that directly towards my loan.
Why not? I am planning to.
stan23
Member
I usually get back 1-2k for fed. This time around it will be an additional 7500 on top of my refund.
I was confused about the whole process myself. Was told it was only a deduction from liability. But my 3 colleagues with model s tells me different. My wife also did a model of next years taxes and indeed should be getting that refund.
Lots of assumptions here. I know a large number of CA owners who are ineligible for the $2,500.
No special treatment in California for federal taxes. The $7500 credit only reduces your overall tax liability. Depending on how much you had withheld, tho, you can get a big rebate. For example, if you had a $10,000 tax liability and you had $11,000 withheld, you'd normally get a refund of $1000. If you then buy a Tesla and get the $7500 tax credit, you'd get a total of $8500 back.
Are you sure? I think you might be wrong here. I've been told it's a straight liability credit and nothing else.
"As a tax credit, the amount of your qualified plug-in electric drive motor vehicle tax credit reduces your tax bill on a dollar-for-dollar basis. In order to claim the credit, you have to have a tax liability you report on your return. It will not increase your refund beyond what is owed. Depending on your liability and other tax credits you take, you may not see the full tax savings of the tentative credit you calculate on Form 8936. This is because the credit is a nonrefundable credit. "
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I don't understand your response. The $7500 federal tax credit reduces your liability. That's all it does. If your liability for the year is less than $7500, you don't get the full benefit. In my scenario, tho, the tax liability was $10,000. With the tax credit, the liability drops to $2500 (ie you get the full benefit). This is definitely not a state by state thing (state taxes, obviously, vary by state). Some people get tripped up by withholding but that's entirely separate from your liability. Your liability is how much you owe the government after all of your deductions / tax credits. Your withholding is just prepaying the liability based on an estimation. If you over pay (because you take advantage of more tax credits than you had planned, for example), you just get a bigger refund.
If you want more detail, see this thread:
Tesla Trade In Value Is Bizarre, What Is Our 2016 S P100D Worth?
stan23
Member
Cameron is 100% correct as I've verified this with my colleagues that have purchased Teslas in the past year.
Yeah agreed - I've done this a few times, Cameron is spot on. Even Tesla retail employees have been known to confuse this and tell prospective buyers they'll get "at least $7,500 back now!" If you don't owe at least $7,500 in federal taxes (independent of your withholding rate), then the value of the credit is not as significant and it is certainly not a cash credit.
If you're already at the point where you'll be getting a refund the $7500 will not add to that. At best, it can only reduce your liability to zero. It can't give you a positive balance (refund).
I don't think that's quite accurate. Your tax liability is the total amount you "owe" the federal government and it's independent of withholdings or prepayments. The EV credit reduces that amount by up to $7,500. If your tax liability is less than $7,500, you can only benefit up to your total tax liability. If you're tax liability is only $5,000, you're tax liability will be reduced to zero and you can't take advantage of the remaining $2,500 (and it's not "refunded" to you). I think where people get confused is how withholdings (or estimated tax payments) impact your liability (and the confusion around the word "owe"). In short, any withholdings or prepayments don't affect your liability at all (although they can impact potential penalties depending on your tax situation). At the end of the year, if your withholdings and prepayments are greater than your tax liability, you get a refund. If they're less, you have to pay the remaining balance of your liability. The simplified formula for how much you "owe" the government at the end of the year is:
Due at end of year = (Tax Liability - MIN(Tax Liability, EV Credit)) - Withholdings
If the value is negative, you get a refund.
Imagine these two simplified scenarios:
Scenario A:
Tax liability: $10,000
EV credit: $7,500
Witholdings: $11,000
At the end of the year, you'll get: ($10,000 - $7,500) - $11,000 = -$8,500 (negative means refund to you)
And the government collected $2,500 total from you for the year
Scenario B:
Tax Liability $10,000
EV credit: $7,500
Withholdings: $0
($10,000 - $7,500) - $0 = $2,500 due to the government
And the government collected $2,500 total from you for the year
As you can see, the government gets the same amount of money, regardless of whether you had withholdings or not (although, separately, the government doesn't like to not be paid throughout the year).
The case where you can't benefit from the whole EV credit might look like this:
Tax Liability $5,000
EV credit: $7,500
Withholdings: $6,000
($5,000 - $5,000) - $6,000 = -$6,000 (refund to you)
And the government collected $0 total from you for the year
Whether you get a refund or not at the end of the year doesn't tell you enough about your tax liability to say whether you can use the full EV credit or not. For example, in that last case, you would've gotten a $1,000 refund from the government without the EV credit. With the EV credit, your refund jumped up to $6,000.
This is 100% wrong. The question is whether you have tax liability for the year. How much money you had withheld (essentially prepaying the federal tax you will owe) is completely irrelevant to whether you will be able to take advantage of the full $7,500 federal tax credit. Again, there are very few people who could afford a Model S who do not owe at least $7,500 in federal tax over a full year. Three exceptions that spring to mind are (1) retirees who have very carefully planned for taxes, (2) people who run all cash businesses (gotta stash the cash somewhere, why not buy a Tesla?), and (3) Donald Trump.
stan23
Member
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