TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker and becoming a Supporting Member. For more info: Support TMC

How do you know you qualify for the tax credit?

Discussion in 'Model 3' started by pkalhan, Apr 29, 2017.

  1. pkalhan

    pkalhan Member

    Joined:
    Aug 29, 2016
    Messages:
    83
    Location:
    Piitsburgh, PA
    Hello Everyone,

    Just wanting to see if anyone knows how we would know if we qualify for the tax credit when purchasing the Model 3. When we are able to configure our cars, will Tesla let us know that we qualify for the tax credit (the full $7,500 or less)? I just trying to get an idea of how that will work. I will buy regardless, but was curious how we would find out.

    Thanks!
     
  2. CT200h

    CT200h Member

    Joined:
    Feb 8, 2016
    Messages:
    114
    Location:
    Warrenton, Va
    Yeah that could get dicey at some point . You are configuring or ordering and depending on timing and production maybe you get it and maybe you get some of it.
    Remember it doesn't go from $7,500 to 0
    It drops to 3750 for some time.
    But yeah knowing if you get the full or the half .... for some buyers it may be a gamble.
     
  3. alseTrick

    alseTrick Active Member

    Joined:
    May 17, 2016
    Messages:
    1,356
    Location:
    Florida, USA
    I would imagine there will be an announcement from Tesla and the IRS when 200,000 is hit. And from there, we know the phase-out.
     
  4. Gangus

    Gangus Member

    Joined:
    Aug 31, 2016
    Messages:
    10
    Location:
    Charleston, SC
    Does anyone know the number of vehicles Tesla has sold in the US so far?
     
  5. wdolson

    wdolson Supporting Member

    Joined:
    Jul 24, 2015
    Messages:
    3,591
    Location:
    Clark Co, WA
    The tax credit goes down in increments and there will be plenty of warning. Once Tesla has sold it's 200,000th car in the US, the $7500 will stay in effect for that quarter and the quarter after, so say they hit 200,000 sometime in Q1 2018 (any time between Jan 1 and March 31), the $7500 will stay in effect until June 30 of that year. Then it drops to $3750 for 2 quarters, and finally to $1875 for another two quarters.

    You also need to look at your personal tax situation. Did you actually owe $7500 in taxes this year? Also keep in mind that the year you buy the car you will also be getting a pretty decent sales tax deduction for the car too (if you live in a state with sales tax). That will vary state to state, but it was a pretty big deduction for me when I did my taxes for 2016 (sales tax here is 8.4%). I didn't use the entire $7500 credit.

    Due to the deductions a lot of families have, many families of 4 with $100K incomes pay less than $7500 in federal income tax. Different people have different tax situations so there is no simple answer, but I think a large number of Model 3 buyers will see their taxes zeroed out even if they only get in at the $3750 level.
     
  6. JeffK

    JeffK Well-Known Member

    Joined:
    Apr 27, 2016
    Messages:
    5,102
    Location:
    Indianapolis
    Make sure not to consider the tax credit when making your purchase... for starters you'd have to make enough money to owe over 7500 which was already mentioned, this is not terribly difficult for married couples. You wouldn't see the tax credit until filing your taxes the following year. Lastly even if you're eligible, you never know if the federal government will decide to take away the EV credit from all manufacturers.

    Check your total tax liability on your taxes you just recently filed to see if you could have taken the full $7500 credit.

    You can check the scorecard here, but note the monthly numbers are estimates until the quarterly results come in.
    Monthly Plug-In Sales Scorecard
     
  7. JeffK

    JeffK Well-Known Member

    Joined:
    Apr 27, 2016
    Messages:
    5,102
    Location:
    Indianapolis
    Uhh.. That doesn't seem right check line 56 of your last 1040A granted I don't have kids but this was significantly higher than $7500.
     
  8. melindav

    melindav ☰ reserved

    Joined:
    Apr 10, 2016
    Messages:
    653
    Location:
    Vancouver, WA
    kids add up pretty quickly (significantly even ;) )on tax credits though
     
  9. Thomas Edison

    Thomas Edison Member

    Joined:
    Apr 3, 2016
    Messages:
    460
    Location:
    Portland
  10. mikevbf

    mikevbf Member

    Joined:
    Feb 11, 2012
    Messages:
    971
    Location:
    vermont
    From a comment I remember Elon made a while back, it sounded like Tesla would game the situation to get the most people in before the tax credit phased out. This was before Trump was elected so the new game might just simply be getting as many people as possible the credit as quickly as possible before Trump and congress turn their attention that way instead of timing deliveries a little late so as to catch the most. It really is a crap shoot at this point especially if you want dual motor and/or performance.
     
  11. wdolson

    wdolson Supporting Member

    Joined:
    Jul 24, 2015
    Messages:
    3,591
    Location:
    Clark Co, WA
    You can always change your withholding during the year if you know you're getting the credit. That's what I did.

    Typically a family of 4 with a $100K income also has other deductions like mortgage, property taxes, etc. I note you said you're paying on a 1040A, which means you don't itemize and you probably only have the standard deduction. Those of us who have to use the 1040 have a lot more deductions.

    Here is a breakdown of how a family of 4 could easily pay less than $7500:
    How a Family of Four with a $100,000 Yearly Income Pays only $6,252 in Federal Income Tax | RichmondSavers.com

    As I said, each person's tax situation is different and there is no golden income that will put you over the $7500 threshold, but a lot of people making around $100K are in a similar tax situation as that example. In the example the family is taking the standard deduction. A lot of people living in more expensive housing markets are paying more than $12K a year in mortgage interest alone, so they will have a bigger deduction than the standard. My mortgage is fairly small (for this area especially), but I still itemize because I have more deductions than the standard deduction.

    I think the EV tax credit is safe for now. The people in charge are so incompetent they are struggling to pass emergency spending bills. They only managed to pass an extension on the current budget that would last 1 week at the 11th hour on Thursday. They have to go back and fight more about it next week.

    Presidents always get more done in their first 100 days than in the rest of their term in office. Congress is most willing to cooperate during that time and as the Midterm elections approach Congress gets more cautious about doing any big legislation for fear of angering their base. So it is quite possible this is the high water mark of the Trump presidency for legislative achievement. He will continue to issue executive orders and he might get us into a war or two, possibly World War III, but Congress is going to be lucky to keep the lights on for the next year and a half.
     
    • Like x 2
  12. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Well-Known Member

    Joined:
    Jul 12, 2012
    Messages:
    5,348
    Location:
    Maine
    • Informative x 1
  13. cpa

    cpa Active Member

    Joined:
    May 17, 2014
    Messages:
    1,377
    Location:
    Central Valley
    Just to clarify, Wdolson, you live in Washington, and Washington does not have a state income tax. You are correct in that the sales tax on a vehicle can be added to the tabular amount based upon one's income for the purposes of deducting sales taxes on Schedule A. However, the law is written that the sales tax deduction is in lieu of the state income tax deduction. So, the taxpayer deducts the larger of the two, but not both. I am not well-versed on the sales tax hit in Pennsylvania to know whether this deduction will be greater than his deduction for state income taxes.

    Our discussion may be moot if the current administration gets its wish, and the deduction for taxes goes out the door.

    Tesla is required to notify the IRS each quarter of the number of domestic electric automobiles that it sells. The IRS is supposed to publish this information on its website. Shockingly, :eek: the published information for Tesla is missing from the IRS website. People with better internet searching skills than I should be able to find the Internal Revenue Service Bulletin that also publishes this information. These bulletins come out weekly, and I would presume that once per quarter contemporary information regarding the BEV credit is printed.

    If I can remember, the next time I am at my research facility, I will try to find the most current information.

    But I think that the manufacturer is ultimately responsible for communicating the amount of credit to its customers.
     
  14. McHoffa

    McHoffa Member

    Joined:
    Sep 29, 2015
    Messages:
    726
    Location:
    Canton, NC
    It's line 47, which doesn't include self employment tax, which sucks for me!
    $7,500 Federal Tax Credit Bummer
     
    • Like x 1
  15. alseTrick

    alseTrick Active Member

    Joined:
    May 17, 2016
    Messages:
    1,356
    Location:
    Florida, USA
    No. He never said that.

    They may alter their deliveries somewhat, but they won't minimize quarterly earnings in order to do so. Elon is fiduciarily responsible to Tesla and it's shareholders, not us peons.
     
    • Disagree x 1
  16. wdolson

    wdolson Supporting Member

    Joined:
    Jul 24, 2015
    Messages:
    3,591
    Location:
    Clark Co, WA
    I didn't know that about the sales tax vs income tax, though I would expect your sales tax in most states would be larger for a year in which you bought a new car.

    I searched the IRS and it appears they only report on Ford, Mercedes, and BMW. Maybe GM, Tesla, and Nissan are off the hook :D

    IRC 30D – Plug-In Electric Drive Motor Vehicle Credit Quarterly Sales
     
  17. Red Sage

    Red Sage The Cybernetic Samurai

    Joined:
    Jul 6, 2014
    Messages:
    3,014
    Location:
    Los Angeles CA
    It is the car that qualifies for an incentive, not the person.
     
  18. Bokonon

    Bokonon Title-customizing Member

    Joined:
    Jan 28, 2016
    Messages:
    231
    Location:
    Newton, MA
    I believe @mikevbf is referring to this Elon Tweet from about a year ago, in which he explicitly says that he is willing to endure "a revenue shortfall in a quarter" in order to "maximize customer happiness" (which, in the context of the exchange, relates to enabling "large numbers of non X/S customers to receive the credit").
     
    • Informative x 2
  19. JeffK

    JeffK Well-Known Member

    Joined:
    Apr 27, 2016
    Messages:
    5,102
    Location:
    Indianapolis
    Plus it's likely this would only have to be done in Q4 2017, which if they had to hold back a few S/Xs and divert a few Model 3s to Canada they'd still be in great shape.

    I wonder if anyone can get Elon on twitter to guarantee the 200,000th US delivery happens in 2018 and not 2017.
     
    • Like x 1
  20. Jason Bourne

    Jason Bourne Member

    Joined:
    Mar 29, 2016
    Messages:
    343
    Location:
    Philly
    Why is this exactly? I believe I understand how the federal tax credit works for buying an EV, but I'm not aware of any way that it interacts with sales tax on the EV's purchase.
     

Share This Page