2017 Model S 75D

[Bebop]

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).

You are right to a degree. It's tricky and it's about looking at it from a different perspective. Now that I think about it some more.

You have 10K in withholdings.
You owe say 8K in taxes.

So you expect a 2K refund check.
-----------------------------------------------

You have 10K in withholdings
You owe 8K in taxes
You subtract $7500 credit from the 8K liability...
Now you only owe $500 in taxes.

Well, you have 10K in withholdings.
So 10K minus $500 that you owe....

You should be getting a refund check of $9500.

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So "technically" the credit is not refund upon itself. So it is correct to say that the credit is strictly a liability credit. No wrong doing there in those words. Exactly how I have stated before too.

What happens is that you get back your own $7500 of your own direct money back technically if the above scenario is correct. So a by-product of the ev credit is that the government is not giving you a direct check for $7500, instead, you are getting back your own money that you already were going to pay uncle sam.

So now I'm understanding where people here have been saying. "Well no...the $7500 is refunded back to you". The wording and phrasing are wrong. The concept is correct though. Now i get it.

 

[Bebop]

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.

Or if you own a business and have a good tax guy then you can reduce your taxable income that you show on your taxes. Thus reducing the liability you have. All about taking advantage of those deductibles as a business owner.

And /Or

You find additional creative ways to pay for it.

 

[b team]

You are right to a degree. It's tricky and it's about looking at it from a different perspective. Now that I think about it some more.

You have 10K in withholdings.
You owe say 8K in taxes.

So you expect a 2K refund check.
-----------------------------------------------

You have 10K in withholdings
You owe 8K in taxes
You subtract $7500 credit from the 8K liability...
Now you only owe $500 in taxes.

Well, you have 10K in withholdings.
So 10K minus $500 that you owe....

You should be getting a refund check of $9500.

----------------------------------------------

So "technically" the credit is not refund upon itself. So it is correct to say that the credit is strictly a liability credit. No wrong doing there in those words. Exactly how I have stated before too.

What happens is that you get back your own $7500 of your own direct money back technically if the above scenario is correct. So a by-product of the ev credit is that the government is not giving you a direct check for $7500, instead, you are getting back your own money that you already were going to pay uncle sam.

So now I'm understanding where people here have been saying. "Well no...the $7500 is refunded back to you". The wording and phrasing are wrong. The concept is correct though. Now i get it.

If you know you are going to buy a Tesla, you can increase your exemptions so that you will pay less taxes throughout the year. Thus, you don't have to wait all year to get the tax benefit.

 

[Mike K]

Guys, no need to pile on. I get what you're saying. In my mind you'd only be getting a refund if you had no liability but as pointed out by several people, my thinking doesn't account for getting a refund for overpayment. I own a company so overpayment generally isn't a problem I experience. ;-)

I should clarify that what I should have said is that if you get to the end of the year and you don't have a tax liability of $7500, you won't be able to realize the full credit. For instance, if you get to the end of the year and your tax liability for the entire year was $3000, the $7500 tax credit will simply wipe out the $3,000. It won't give you a $4,500 refund as I think some here suspect it will. I think a lot of people are under the impression that this is structured like the old first time home buyer credit where you could theoretically get an $8,000 check from the government, even if your tax liability for that year was $0. That better?

 

[Bebop]

I should clarify that what I should have said is that if you get to the end of the year and you don't have a tax liability of $7500, you won't be able to realize the full credit. For instance, if you get to the end of the year and your tax liability for the entire year was $3000, the $7500 tax credit will simply wipe out the $3,000. It won't give you a $4,500 refund as I think some here suspect it will.

This is exactly correct.

 

[stan23]

Guys, no need to pile on. I get what you're saying. In my mind you'd only be getting a refund if you had no liability but as pointed out by several people, my thinking doesn't account for getting a refund for overpayment. I own a company so overpayment generally isn't a problem I experience. ;-)

I should clarify that what I should have said is that if you get to the end of the year and you don't have a tax liability of $7500, you won't be able to realize the full credit. For instance, if you get to the end of the year and your tax liability for the entire year was $3000, the $7500 tax credit will simply wipe out the $3,000. It won't give you a $4,500 refund as I think some here suspect it will. I think a lot of people are under the impression that this is structured like the old first time home buyer credit where you could theoretically get an $8,000 check from the government, even if your tax liability for that year was $0. That better?

Having a only a 7500 tax liability means that you're making around 30K a year. I assume most people in the position to buy a Tesla is making a bit more than 30K a year.

Unless of course you're retired, then you wouldn't have any income, so the 7500 rebate on liability won't do you any good.

 

[Mike K]

Having a only a 7500 tax liability means that you're making around 30K a year. I assume most people in the position to buy a Tesla is making a bit more than 30K a year.

Unless of course you're retired, then you wouldn't have any income, so the 7500 rebate on liability won't do you any good.

Someone with an S corp that's rolling their profits back into the business could very easily have a low tax liability but I'd agree that we're all really arguing a rare scenario.