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Fed tax credit

Discussion in 'Model S: Ordering, Production, Delivery' started by kuttakamina, May 26, 2015.

  1. kuttakamina

    kuttakamina Member

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    Really really dumb question, but just making 100% sure.

    In order to get the $7500 fed tax credit, I need to make sure that I underpay my fed taxes by $7500 for 2015.

    Right?
    No other tricks I hope!? :)
     
  2. travwill

    travwill Member

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    #2 travwill, May 26, 2015
    Last edited: May 26, 2015
    Underpaid is safe way to say it, but it isn't really that you need to have tax due versus a refund. The EV credit is a credit on line 53. You just need to ensure you have tax liability on line 44, which you probably will for sure. You use the credit to reduce that tax liability before deductions basically that come after that. Only note is that it is a non-deductible credit so you can't bring line 44 below $0 and get anything back of it so it is most optimal that you make sure you have a $7500+ tax liability so you can benefit from the entire credit (again which you probably will). After that, then your deductions like mortgage, tax, and hopefully even the sales tax refund you can take depending where you are (since you made a big sales tax purchase in the year) all come next and you get a larger refund - which includes the credit in a way ;-)

    Look back on some of your old returns and judge what that line was without adjustments to your exemptions, etc. You should be fine. To ensure you owe more even, you can say increase you're withholding exemptions at work by another 2 since 1 exemption exempts you from paying tax on $3950 for the entire year (but the year is 3/4 done so could do 3).

    -T
     
  3. Insane

    Insane Banned

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    It is the total federal taxes you will pay for 2015 irrespective of you underpay or overpay. If the total taxes you will pay for 2015 is $ 6,000, then $ 6000 is all you will get from the fed rebate.
     
  4. Tamar

    Tamar Member

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    And to say it another way....your refund will be increased by $7500 if you are owed a refund. ASSUMING that you pay at least that much in taxes.
     
  5. Galve2000

    Galve2000 Member

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    Thank you for this explanation. While I will happily take the $7,500 tax credit in my 2015 tax returns, my accountant says I will not be able to to deduct the sales tax from the purchase of my Model S as part of my Sales Tax refund. (even though it clocks in at roughly $8,800 here in NY State.)

    I explained to him that I am spending over $100,000 on a car and it would be nice if I could get some sort of credit for the sales tax. but he says that is no longer possible.

    do I need a new accountant?
     
  6. kuttakamina

    kuttakamina Member

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    Unfortunately (or fortunately in this case), I definitely have > 8K taxes in a year.
    So basically, I can just sit back and be assured that I'll get a 7500 bump next year.
     
  7. No2DinosaurFuel

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    Assuming you didn't make millions on TSLA stocks and have to pay capital gain tax. Then it might wipe out your 7500 refund. But then again it's always for the better if you made millions on TSLA stocks. LOL
     
  8. cpa

    cpa Member

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    #1: The $7,500 income tax credit is only available against your income tax liability. That is the amount figured on line 44, based upon your taxable income (after itemized deductions) which is on line 43. It is then further limited by any credits appearing on lines 48 through 53. For example, if your income tax liability is $7,525 and you claim a foreign tax credit of $100, then your electric vehicle credit is limited to $7,425, and the unused $75 is gone forever. Moreover, any additional taxes that you might pay (SE tax, nanny tax, net investment income tax, additional Medicare tax on earned income, 10% penalty tax for premature distribution of a qualified plan, etc.) are not affected by this credit. For example, your income tax liability on line 47 is $6,000. Your SE tax is $3,500. The electric vehicle credit will wipe out your $6,000 in income tax, but you must still pay $3,500 in SE tax. Again, the $1,500 of unused credit vaporizes.

    #2: The deduction for state sales taxes: The itemized deduction for taxes on Schedule A is the greater of your state income taxes paid or the sales taxes paid based upon your income plus the purchase of the Tesla or any automobile. You do not get both. Look at Schedule A, lines 5a and 5b. See that little word, "or?" And since most of us who purchase these autos are subject to Alternative Minimum Tax, any tax deduction is moot.
     
  9. kuttakamina

    kuttakamina Member

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    cpa - thanks for your very clear answer!

    Actually, just got off the phone with my accountant. I'm set, I should get the refund.
    I wish our damn tax stuff wasn't so complicated. :-/ whatever!
     
  10. drrex1

    drrex1 Banned

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    2013 P85 with 48,750 miles. Vin 19735 All options except 21s, dual chargers. Sticker 102k (early pricing) . Offer in early Jan 2015 $62,000, Took to Carmax, also 62,000. Placed ads online and got full price 75,500. I just got lucky. Now have a P85D sticker 125k. Cyclones, pano, sound, next gens f/r, cold pkg, tech, air. Great car!
     

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