California rebate eligibility (tax help question)

[shredlock]

Hello folks. I finally took the plunge and got myself a Model 3, it arrived before Christmas and the CA licence plate have been issued. Now i'm looking at applying for rebates. For eligibility, the California rebate guideline stated:

(Income Eligibility)
"On IRS Form 1040: Sum of lines 7–21 (in some circumstances the Sum of Lines 7–21 may not equal Line 22 in determining Gross Income)"

I looked at my 2017 form 1040 and I found myself in a borderline eligible situation which will depend on how this gross income is calculated. Specifically, this has to do with how i deal with line 9a (Ordinary dividend) and line 9b (Qualified dividend)
- if i add all the lines together (7, 8, 9a, 9b, 10..21) it is OVER the eligibility limit.
- if i leave line 9b out of the calculation that sum is WITHIN the limit (Form 1040 total gross income leaves out line 9b)

Basically i wanted to check with tax-savvy fellows to see if i'm eligible for the rebate or not:
- If line 9a total amount already included the amount reported in line 9b, then i am eligible.
- If the sum must include both lines, then i'm not.

 

[gilscales]

Hello folks. I finally took the plunge and got myself a Model 3, it arrived before Christmas and the CA licence plate have been issued. Now i'm looking at applying for rebates. For eligibility, the California rebate guideline stated:

(Income Eligibility)
"On IRS Form 1040: Sum of lines 7–21 (in some circumstances the Sum of Lines 7–21 may not equal Line 22 in determining Gross Income)"

I looked at my 2017 form 1040 and I found myself in a borderline eligible situation which will depend on how this gross income is calculated. Specifically, this has to do with how i deal with line 9a (Ordinary dividend) and line 9b (Qualified dividend)
- if i add all the lines together (7, 8, 9a, 9b, 10..21) it is OVER the eligibility limit.
- if i leave line 9b out of the calculation that sum is WITHIN the limit (Form 1040 total gross income leaves out line 9b)

Basically i wanted to check with tax-savvy fellows to see if i'm eligible for the rebate or not:
- If line 9a total amount already included the amount reported in line 9b, then i am eligible.
- If the sum must include b

I can tell you that you have 18 months to claim so potentially 2 more tax years to choose from (not that we wish that you have an income reduction! but for some small business owners like myself income varies wildly from year to year) also this income cap includes family members in some instances

"For the purposes of CVRP, a household includes all family members or other unrelated persons, including the rebate applicant, who reside together and share common living expenses. Income verification is completed for all members of the household ages 17 years and older. Note: Roommates who do not have a lease separate from the applicant are considered part of the applicant’s household."

 

[Tam]

...If the sum must include both lines, then i'm not.

Not a tax expert but that is what I understand. You must add all incomes including qualified dividends and all others that you haven't thought about (tips, lottery winnings...)

 

[Glamisduner]

I wish I had your tax problems. Sounds like you technically don't qualify.

I'm not a tax expert, and being jealous of your income I would just use line 22 and then play stupid. It only matters if they require income verification when you apply, they may not even ask for verification.

 

[NathanielHrnblwr]

Are you asking if it's ok to leave out a line to ensure you're under the limit? LOL

I suggest you call them. Here's why. The instructions posted on the website are incorrect as the 1040 was redesigned for tax year 2018. The standard deduction is moved to line 8 from 40 which clearly doesn't get added to determine gross income. I'd guess it's now lines 1-6. Regardless, you can ask if they have any suggestions as you may be right at the threshold for ineligibility.

Did you buy the car yourself or with a partner?

 

[Glamisduner]

I wish I had your tax problems. Sounds like you technically don't qualify.

I'm not a tax expert, and being jealous of your income I would just use line 22 and then play stupid. It only matters if they require income verification when you apply, they may not even ask for verification.

It was supposed to be "despite being jealous"

FWIW I did not have to do income verification. I'm not sure what triggers it, or if it's a random thing they do.

 

[NathanielHrnblwr]

It was supposed to be "despite being jealous"

FWIW I did not have to do income verification. I'm not sure what triggers it, or if it's a random thing they do.

Did you provide a 4506-T? I recall that being part of the process to apply.

 

[Glamisduner]

Did you provide a 4506-T? I recall that being part of the process to apply.

I don't think so, although I remember that they MAY request tax information for income verification. For me they did not. Maybe if your close to the total amount the probability of this increases? I really do not know what triggers it.

 

[Tam]

Did you provide a 4506-T? I recall that being part of the process to apply.

It has an asterisk for the form:

"*You do not have to submit proof of income unless you have been selected for income verification."

You don't submit the 4506-T form until CVRP does an audit on you and it would specifically ask you to submit it afterward and not before.

 

[cpa]

On the form 1040, qualified dividends are included in ordinary dividends. Qualified dividends are taxed at the more favorable capital gains rates, while ordinary dividends are taxed at marginal rates. Your qualified dividends will always be less than or equal to your ordinary dividends.

Qualified dividends are only those that are paid from a corporation's accumulated earnings and profits (essentially double-taxed income, as the corporation also paid income taxes on its profit.)

Ordinary dividends include not only qualified dividends, but also short term capital gain distributions from mutual funds, de facto interest income from mutual funds, REIT dividends, and a few others.

Look carefully at your 1099 - DIV from prior years. There will be a box for ordinary dividends and another box for qualified dividends. Brokerage houses have their own substitute form that report the same information albeit in a different format from the IRS version.

So, yes, you use total dividends in your calculation. California makes no differentiation between qualified and non-qualified dividends.