Applicable Tax Year for Car Tax Credit

[SageBrush]

Hi All,

I'm trying to finagle it so that I get the EV tax credit active in 2023, but to take delivery in early 2024 so that the tax credit is reported on my 2024 tax return and self employed vehicle work use depreciation is from 2024 onwards.

Possible ?

A possibly related question is when Tesla dates the car title. When I pay in full, when the car is delivered, or sometime else ?

Thanks !

 

[tldickerson]

I would think that the date on the bill of sale should be all you need.

 

[EVRider-FL]

You posted this in the Model S forum, but the Model S is not eligible for the Federal EV tax credit. In any case, the credit applies in the year you took delivery, so you can’t use a 2023 credit if you didn’t take delivery then.

 

[DerbyDave]

And any credit would be on the date of purchase when you pick the car up and pay for it, not the date you title it or received a title or registration. I had a car that arrived in late December, and the dealer allowed me to "test drive" it until January 2, when I bought the car. No way Tesla would do anything like this.

 

[SageBrush]

And any credit would be on the date of purchase when you pick the car up and pay for it, not the date you title it or received a title or registration

Indeed. I was considering paying for the car late Dec and picking up in Jan

 

[DerbyDave]

Form 8936 is the form for last year's 2022 EV credit, and it says the following reqirements:

• You are the owner of the vehicle. If the vehicle is leased, only the lessor and not the lessee is entitled to the credit.
• You placed the vehicle in service during the tax year.
• The original use of the vehicle began with you.
• You acquired the vehicle for use or to lease to others, and not for resale.
• You use the vehicle primarily in the United States.
• For vehicles purchased after August 16, 2022, the final assembly of the vehicle must occur within North America. For more information, go to IRS.gov/pluginvehiclecreditamounts and select vehicles purchased in 2022 or before.

Probably this year's form will be similar.

 

[SageBrush]

You placed the vehicle in service during the tax year.

Yeah ...
Here is the IRS verbiage for what 'in service' means:

A5. The new clean vehicle credit is claimed in the tax year that the vehicle is placed in service, meaning the tax year that includes the date the taxpayer takes delivery of the vehicle.

 

[ATPMSD]

I'm trying to finagle it so that I get the EV tax credit active in 2023, but to take delivery in early 2024 so that the tax credit is reported on my 2024 tax return and self employed vehicle work use depreciation is from 2024 onwards.

This sounds like a commerical use, so you need to look at those rules. Also, the allowed depreciation is reduced by any tax credits you receive. You should talk with your Tax accountant.

 

[SageBrush]

Also, the allowed depreciation is reduced by any tax credits you receive. You should talk with your Tax accountant.

I had no idea that.was the case. Is the reduction in allowed depreciation only applied to the first year, or overall ?
Essentially, no double dipping ?

 

[ucmndd]

Yeah ...
Here is the IRS verbiage for what 'in service' means:

That seems crystal clear to me. The vehicle is "placed in service" when you take delivery, and that is the year for which you claim the tax credit. It matters not one bit if you pay for it in a different tax year.

 

[SageBrush]

That seems crystal clear to me. The vehicle is "placed in service" when you take delivery, and that is the year for which you claim the tax credit. It matters not one bit if you pay for it in a different tax year.

I read it the same way. So that covers what tax year I report the EV purchase and claim the credit.

Still unclear to me is the timing and circumstances that dictate the amount of the EV credit. I'm thinking about this because Tesla is saying that the EV credit will likely be reduced come Jan 1st. Earlier this year, the Chevy Bolt was expected to lose its EV credit in March sometime (which didn't actually happen -- I think due to a 're-interpretation' of the rules by the Biden admin), but people who had ordered and PAID for the car before the declared final day of EV eligibility in March could still claim the credit even if delivery was later.

 

[ATPMSD]

I had no idea that.was the case. Is the reduction in allowed depreciation only applied to the first year, or overall ?
Essentially, no double dipping ?

It depends on the deprecation method chosen. This is why your really need to speak with a well versus Tax Account as opposed to well intentioned people on forums. Good luck!