$7500 credit

[lovingit]

My friend just purchased a 70D and told me that the $7500 was taken off the sale price.
I thought it was $7500 that reduces your taxable income. But he told me his list price was around $80k but they took off $10,000 (federal $7500 + CA $2500) and his sales price ended up being $70k.
I thought the only cash back was the CA state of $2500 which they send as a check in the mail. The federal $7500 is not reduced off the sales price.

 

[Max*]

You understand correctly.

Did your friend pay already? If not, the first purchase snapshot (I don't want to call it an agreement) has some funny wording on it making it look like the total cost of the car is less due to the tax credits. That's likely what he's seeing. The final MVPA will not have the tax credits removed.

 

[2krazykats]

For the Fed credit, you have to claim it on your tax return so if they took it off, they probably made a mistake. I certainly did not get Fed or State tax credits deducted when I bought mine. He might've gotten lucky and saved some tax on it...

 

[BertL]

Right. You must claim both. Fill out forms for CA after purchase, and you get a check from the State -- I did it. Federal requires you submit it as part of your tax return, and the credit will come off what you owe the Feds -- I have that all set up in TurboTax for my 2015 return.

There is no discount of the actual amount you pay to Tesla at time of delivery, but the Design Studio will give you the impression your out-of-pocket expense includes both things -- which it does I suppose, assuming you wait to submit the paperwork after delivery AND you owe more than $7500 in Fed taxes to get the credit. I personally don't like what Design Studio does presenting numbers, because it took me a while to figure out what was going on when I first started into my MS research, but that's been discussed a lot in other threads, so won't repeat it all here.

 

[travwill]

My friend just purchased a 70D and told me that the $7500 was taken off the sale price.
I thought it was $7500 that reduces your taxable income. But he told me his list price was around $80k but they took off $10,000 (federal $7500 + CA $2500) and his sales price ended up being $70k.
I thought the only cash back was the CA state of $2500 which they send as a check in the mail. The federal $7500 is not reduced off the sales price.

You definitely need to file taxes to get the $7500 back, during your prior year tax return. Note, you actually have to owe taxes as well to benefit from the $7500, almost everyone should have tax liability buying a MS it seems.

The confusion probably comes from when you order, they show the price reduced, and then when you actually get ready to pay, you get the full cost shown without deduction. See these two graphics of the design center estimate versus motor vehicle purchase agreement.

 

[brec]

My friend just purchased a 70D and told me that the $7500 was taken off the sale price.
I thought it was $7500 that reduces your taxable income. But he told me his list price was around $80k but they took off $10,000 (federal $7500 + CA $2500) and his sales price ended up being $70k.
I thought the only cash back was the CA state of $2500 which they send as a check in the mail. The federal $7500 is not reduced off the sales price.

I don't know about California, but with respect to the $7,500 Federal income tax credit, you're both wrong.

The credit is a reduction in your total income tax for the year in which the car is placed in service; it is not a reduction in your taxable income. In other words, it's a credit, not a deduction. The credit reduces your total tax for the year by $7500, but not to less than zero. After calculating the total tax, you then apply any withholding or estimated tax payments you may have made to see whether you have to send a check or get a refund.

 

[2krazykats]

You definitely need to file taxes to get the $7500 back, during your prior year tax return. Note, you actually have to owe taxes as well to benefit from the $7500, almost everyone should have tax liability buying a MS it seems.

The confusion probably comes from when you order, they show the price reduced, and then when you actually get ready to pay, you get the full cost shown without deduction. See these two graphics of the design center estimate versus motor vehicle purchase agreement.

View attachment 106757View attachment 106758

I bet this is where the confusion comes in. I found this document to be misleading because it was different than the MVPA that was ultimately generated which did not take the fed tax credit into account. To someone who didn't know you have to file to take the tax credit, this could be misleading.

 

[Shaggy]

Unless it was a lease, in which case a lot of the time the true owner (leasing company) passes that to the lessee. They cannot know what your personal income tax liability is and cannot claim it for you so it seems like a poorly worded item vs. sales speak for 'pay now, refund next year... maybe'

 

[Max*]

O crap, someone should call Tesla. They forgot to include the $10k gas savings!

 

[msnow]

^^ bwah ha ha

 

[JenniferQ]

O crap, someone should call Tesla. They forgot to include the $10k gas savings!

Lmao! But, to be fair, I am actually thinking of that "gas savings" as I crunch numbers to see how a CPO can maybe be close to the same as a new "lesser" BEV or Hybrid (the horror!) for my dd. Unfortunately, trying to insure a teen on a Tesla is going to be astronomical!

 

[Super_Popular]

O crap, someone should call Tesla. They forgot to include the $10k gas savings!

HA!

 

[Max*]

Lmao! But, to be fair, I am actually thinking of that "gas savings" as I crunch numbers to see how a CPO can maybe be close to the same as a new "lesser" BEV or Hybrid (the horror!) for my dd. Unfortunately, trying to insure a teen on a Tesla is going to be astronomical!

I drive a lot (6 months so far, crossed 15k miles last week), so I considered gas savings too. But Tesla shouldn't have had it listed prominently on the home page, thankfully it's been fixed.

CPO won't get you the $7,500, but a model 3 would .

 

[JenniferQ]

I drive a lot (6 months so far, crossed 15k miles last week), so I considered gas savings too. But Tesla shouldn't have had it listed prominently on the home page, thankfully it's been fixed.

CPO won't get you the $7,500, but a model 3 would .

Yes, but she needs transportation next year, not in 2,3,4???:tongue:

 

[kort677]

My friend just purchased a 70D and told me that the $7500 was taken off the sale price.

if your friend PURCHASED his tesla then he is incorrect, if he leased it the $7500 was used against the residual value in the payment computations and tesla will get the actual tax credit.

 

[sorka]

if your friend PURCHASED his tesla then he is incorrect, if he leased it the $7500 was used against the residual value in the payment computations and tesla will get the actual tax credit.

Does that mean if you don't qualify for the tax credit that Tesla can still take the credit if you lease?

 

[kort677]

Does that mean if you don't qualify for the tax credit that Tesla can still take the credit if you lease?

when I leased my leaf the $7500 credit was used as a cap cost reducer making the payments lower, I assume that is how it would be with a Tesla.