Another Fed. Tax Credit question

[gambit48]

First of all, I have to give credit to Tesla for the incredibly fast response. I sent them an e-mail asking about the transferability of the reservations (including the part where it says in the agreement about needing Tesla's agreement in writing). Essentially, it was a big "no" for all but extreme cases (like if the reservation owner died after submitting production order).

My situation is this: I placed 2 reservations on the first day. I was told by a Tesla employee at the time (multiple ones actually, including the one helping me on the computer to place the reservations) that I could do it for immediate family members only. One if for me, but one is for my parents.

Apparently, that isn't true. At least it's not true anymore.

I was just told that I have to be the buyer and pay for both. However, I'm allowed to register the vehicles to whoever I want. But, since I'm the "buyer", I'm the one who is eligible for the tax credits.

Can you guys help me figure this out?

I have no problems dealing with the payment. It's my parents. We'll work it out.

I'm more concerned about the tax credits. I understand there's no limit, so I can apply for 2.

I also have more than $15,000 in tax liability every year. I can absorb it. However, I usually have slightly more than my tax liability withheld so I end up getting a small refund. That shouldn't affect my ability to get the credit, right? I'll just get a monster tax refund that year (or adjust my withholding to withhold less that year, etc).

I'd prefer to register my parents' car under their names, and have them apply for the credit for their vehicle. If we just register it under their name, can they just file that IRS form under their names and claim the credit regardless of who Tesla considers the "buyer"?

 

[gregincal]

As far as your first question, that's no problem. As you say, you'll just get a massive refund.

I'm not sure about your second question, but I doubt it's that easy.

 

[rnelsonee]

. That shouldn't affect my ability to get the credit, right?

Correct. Tax is calculated before (and therefore independently) of payments on the 1040.

If we just register it under their name, can they just file that IRS form under their names and claim the credit regardless of who Tesla considers the "buyer"?

The IRS defines 'acquired' as

>Acquired. A vehicle is not “acquired” before the date on which title to that vehicle passes under state law.

and then says

>(3) The vehicle is acquired for use or lease by the taxpayer, and not for resale;

So the person that uses the car gets the credit. Whether or not that person also has to be the titleholder is up for interpretation.

 

[gambit48]

I see. I'm guessing that Tesla will insist on title being in my name, but I can have it registered with the state under whoever I want.

I wonder if they'll allow my parents to be on title with me. That would make it easier to put under their insurance, I imagine.

The silver lining is the sales tax where I live is 2% cheaper than where they live. Maybe it's worth the hassle.

Or am I reading it wrong?

 

[boaterva]

It's pretty clear in the IRS instructions that you are supposed to be the user/owner of the car. The interpretation has been if you are audited, they would probably want to see the car around and in your name.

Can you have title and register it to someone else? Good question. Joint title (and maybe joint registration?) maybe the best answer to satisfy the IRS and the state.

 

[gambit48]

Yeah, maybe I should consider joint registration. Since it's a parent-child thing, it wouldn't look that weird. It would be super rare for an audit to go to the level of them wanting to see the car. It would typically be just a paper audit where they just ask for paperwork. Even then, it's not a big deal. They visit all the time. They usually fly, but could certainly drive and bring the car to me.

 

[Thomas Edison]

Another question is how will this effect whether or not you get the full tax credit on both. If you would qualify based on income and time (before or after the 200,000 taper).

 

[S3XY]

You will have to take both tax credits as your parents aren't the buyers. The problem this will cause is whether or not your tax liability is large enough to take both credits in full. The EV tax credit is not refundable so you would have to have at least a $15,000 tax liability for the year. There are a couple ways to increase your tax liability so read through the other tax credit threads. It's brought up in almost all of them. The easiest thing to do, logistically at least, is to delay delivery of one of them so it's purchased in the next tax year.

 

[Thomas Edison]

Having 2 reservations in your name likely has each car delivered in a different year as the second one puts you down the line from the first. Making it easier to not worry about if you qualify for the full amount in a single year.

 

[gambit48]

They're both currently expected to deliver Nov - Jan. I was in line at a store on Mar. 31 so I'm a first day reservation. Non-Tesla owner.

Let's just say I've got plenty of tax liability to take a $15,000 credit.

 

[Thomas Edison]

Then based on all that info you don't have anything to worry about, Haha. One would think the duel registertaton on one would be the solution. I was under the impression that people with 2 reservations had to wait after getting the first car.

 

[mongo]

First of all, I have to give credit to Tesla for the incredibly fast response. I sent them an e-mail asking about the transferability of the reservations (including the part where it says in the agreement about needing Tesla's agreement in writing). Essentially, it was a big "no" for all but extreme cases (like if the reservation owner died after submitting production order).

My situation is this: I placed 2 reservations on the first day. I was told by a Tesla employee at the time (multiple ones actually, including the one helping me on the computer to place the reservations) that I could do it for immediate family members only. One if for me, but one is for my parents.

Apparently, that isn't true. At least it's not true anymore.

I was just told that I have to be the buyer and pay for both. However, I'm allowed to register the vehicles to whoever I want. But, since I'm the "buyer", I'm the one who is eligible for the tax credits.

Can you guys help me figure this out?

I have no problems dealing with the payment. It's my parents. We'll work it out.

I'm more concerned about the tax credits. I understand there's no limit, so I can apply for 2.

I also have more than $15,000 in tax liability every year. I can absorb it. However, I usually have slightly more than my tax liability withheld so I end up getting a small refund. That shouldn't affect my ability to get the credit, right? I'll just get a monster tax refund that year (or adjust my withholding to withhold less that year, etc).

I'd prefer to register my parents' car under their names, and have them apply for the credit for their vehicle. If we just register it under their name, can they just file that IRS form under their names and claim the credit regardless of who Tesla considers the "buyer"?

From a bit of Google, it seems that CA does not charge use/ sales tax on transfers between child/ parent so the title transfer should not be a problem. Financing would be more convoluted (brand new used car)...
Reg 256 is the one you want, I think.

 

[gambit48]

From a bit of Google, it seems that CA does not charge use/ sales tax on transfers between child/ parent so the title transfer should not be a problem. Financing would be more convoluted (brand new used car)...
Reg 256 is the one you want, I think.

Yeah, I'm not worried about the sales tax.

What I'm worried about is mucking up my eligibility for any tax rebate by messing with the title and/or registration. For example, although there's no money for it right now, the CA rebate requires 30 months of ownership or something like that.

I don't want to muck up my rebate eligibility while still wanting to insure it (and possibly register it) under my parents' name(s). Hopefully the dual registration doesn't screw things up. I'm trying to be as legit as possible here.

 

[T34ME]

Let's just say I've got plenty of tax liability to take a $15,000 credit.

Why not take both cars in your name and take the $15K tax credit? Then sign one over to your parents and give them a check for $7500.

 

[rxlawdude]

Why not take both cars in your name and take the $15K tax credit? Then sign one over to your parents and give them a check for $7500.

The safest bet is registration in both names at purchase, then delete your name in a couple of months so that you "put the vehicle into service."
There is potential liability for you if your parent drives it into something or someone while you're on the title, as you'd be jointly liable (for anything insurance doesn't pay, of course).

 

[SkagitDoug]

First of all, I have to give credit to Tesla for the incredibly fast response. I sent them an e-mail asking about the transferability of the reservations (including the part where it says in the agreement about needing Tesla's agreement in writing). Essentially, it was a big "no" for all but extreme cases (like if the reservation owner died after submitting production order).

My situation is this: I placed 2 reservations on the first day. I was told by a Tesla employee at the time (multiple ones actually, including the one helping me on the computer to place the reservations) that I could do it for immediate family members only. One if for me, but one is for my parents.

Apparently, that isn't true. At least it's not true anymore.

I was just told that I have to be the buyer and pay for both. However, I'm allowed to register the vehicles to whoever I want. But, since I'm the "buyer", I'm the one who is eligible for the tax credits.

Can you guys help me figure this out?

I spoke with my financial advisor this morning regarding a related tax-credit issue. The conclusion was that I can reduce my withholding so it is $15,000 less than your present withholding, presuming both will be delivered at such time you'll be eligible for the full $7,500 tax credit on each vehicle.

Hope this information is as helpful to you as it was to me!

 

[SkagitDoug]

I spoke with my financial advisor this morning regarding a related tax-credit issue. The conclusion was that I can reduce my withholding so it is $15,000 less than your present withholding, presuming both will be delivered at such time you'll be eligible for the full $7,500 tax credit on each vehicle.

Hope this information is as helpful to you as it was to me!

Sorry: YOU can reduce YOUR withholding so it is....

 

[IlliniPDX]

Sorry: YOU can reduce YOUR withholding so it is....

Your financial advisor, frankly, is an idiot. The tax credit for EVs is not based on the amount you owe at the end of the year, after withholdings, but based on the amount of tax you owe on your entire taxable income, including the amount that was withheld throughout the year. I.e. for married filing jointly in 2017, your taxable income must be $94,090 in order to have $15,000 federal tax liability. The amount that your refund would be at the end of the year before the tax credit does not matter.

 

[ABC2D]

I spoke with my financial advisor this morning regarding a related tax-credit issue. The conclusion was that I can reduce my withholding so it is $15,000 less than your present withholding, presuming both will be delivered at such time you'll be eligible for the full $7,500 tax credit on each vehicle.

Hope this information is as helpful to you as it was to me!

I think you need a new "financial advisor", one who actually knows what he's talking about, as the one you currently have, does not. As @IlliniPDX pointed out, tax credit is dependent on your tax liability, which, in turn, depends on your taxable income, not your withholdings. You might withhold 1 gazilion dollars but if your tax liability is less than $7,500 - you'll get only up to that amount.

 

[kengchang]

No, his financial advisor is correct that you can lower your withholding NOW if you are expected to get the rebate. You get cash NOW instead of waiting for the tax rebate while you file the tax return.