[Incorrect post] EV Tax credit mischaracterization

[Az_Rael]

Not this again. Not more misinformation.

There probably need to be a sticky post with accurate info in the first post (maybe as a wiki or something) (@TEG ?)

Because of the way the EV rebate is marketed, LOTS of new 3 buyers are going to have these same questions.

 

[Max*]

There probably need to be a sticky post with accurate info in the first post (maybe as a wiki or something) (@TEG ?)

Because of the way the EV rebate is marketed, LOTS of new 3 buyers are going to have these same questions.

I gotta give it to the OP, he took the new information, provided relevant numbers and realized he's wrong. :thumbup:

The guy in the Model S forum OTOH :shakesfist:

 

[JeffK]

Let me give a few parting words of wisdom before I stay out of this thread...

One surefire way to increase tax liability is to make more money. Between now and the time you get a model 3, focus on doing that!

 

[PhysicsGuy85]

Yes yes yes, I have already reported my own OP to get this thread deleted. MAYBE, the correct information should be pinned at the top of this forum, since there IS so much misinformation out there???

 

[PhysicsGuy85]

I gotta give it to the OP, he took the new information, provided relevant numbers and realized he's wrong. :thumbup:

The guy in the Model S forum OTOH :shakesfist:

I'm a science teacher, of course I can change my mind when I am wrong

 

[JeffK]

I'm a science teacher, of course I can change my mind when I am wrong

I used to teach science. Keep up the good work!

 

[PhysicsGuy85]

No no no no no no no no no no no no no no no. I don't know how many times we need to go over the same thing.

It has NOTHING to do with what you owe in April. It has everything to do with what your LIABILITY is.

Liability = what you owe the feds for the whole year
Withholdings = what you withhold from your paycheck (etc.) during the year
Tax time in April = Liability - Withholdings. If you withheld too much, you get a refund. If you didn't withhold enough, you owe uncle sam more money (and possibly a penalty).

The Tesla rebate is dependent on the liability. Not the withholdings. Nothing to do with April, except that's when Tax season ends.

For your case. A) correct
B) If your tax liability was more than $7,500, you'd get a check for $5,500 back
C) if you were due a refund in April, because your withholdings exceeded your liability (and your liability is more than $7,500). You'd get a check for $7,500+whatever you overpaid.

This is why I reported my own OP to get it deleted. Perhaps a super clear accurate post needs to be PINNED at the top f this forum? There IS a ton of misinformation out there. I feel like I know A LOT about EV's, and somehow this evaded me. I am not alone.

 

[PhysicsGuy85]

There probably need to be a sticky post with accurate info in the first post (maybe as a wiki or something) (@TEG ?)

Because of the way the EV rebate is marketed, LOTS of new 3 buyers are going to have these same questions.

YES.

 

[ofsvegas]

For another example:

My wife & I have a Tax Liability of $11,600 and both have M3 reservations.
If we claim 1 vehicle in December & 1 vehicle in January we will be able to claim a $7,500 rebate in 2018 and claim the other $7,500 rebate in 2019
If both vehicles are claimed in the same year then our total rebate we can claim is $11,600 in one year and nothing the following year since the rebates do NOT rollover.

 

[JeffK]

For another example:

My wife & I have a Tax Liability of $11,600 and both have M3 reservations.
If we claim 1 vehicle in December & 1 vehicle in January we will be able to claim a $7,500 rebate in 2018 and claim the other $7,500 rebate in 2019
If both vehicles are claimed in the same year then our total rebate we can claim is $11,600 in one year and nothing the following year since the rebates do NOT rollover.

Just a point of note... This is not a tax rebate it's a "tax credit".

In English we sometimes use these words interchangeably, but as far as taxes go, they are different.

 

[gambit48]

When I got my S, I only was only able to use $400.00 on the credit. I'm very tax efficient. Anyone with less than $7500.00 in owed taxes will only be able to a part of the credit. It is really not proper to advertise the credit the way it is advertised . A lot of 3 buyers are going to get a rude surprise . It' s not just Tesla. They all advertise this way.

Yep, a lot of small tax owners can actually afford the car, even if their tax return doesn't suggest it. I'm guessing that those savvy enough to be the most "efficient" on their tax returns would know enough about the tax code to not be surprised by this. They, like you, just accept it as a matter of doing business.

I'm thinking it's the ones stretching to afford the $35,000 version who will most likely be hit by this. Or the retired ones who have a large enough savings to pull out and afford one. People who haven't been playing with various tax schemes their whole lives. Those are the ones who will be surprised.

 

[dsvick]

There probably need to be a sticky post with accurate info in the first post

MAYBE, the correct information should be pinned at the top of this forum, since there IS so much misinformation out there???

There already is, it's the tax credit clarification thread, unfortunately you need to wade through several pages of redundant examples in order to get the info. It would be nice if there were a thread with only the info that could not be commented in.

 

[S3XY]

For another example:

My wife & I have a Tax Liability of $11,600 and both have M3 reservations.
If we claim 1 vehicle in December & 1 vehicle in January we will be able to claim a $7,500 rebate in 2018 and claim the other $7,500 rebate in 2019
If both vehicles are claimed in the same year then our total rebate we can claim is $11,600 in one year and nothing the following year since the rebates do NOT rollover.

Correct that you could split it between years but your amounts are wrong. Also note that you have to claim the tax credit in the year it is delivered. So you would have to time your deliveries in order to break them up into separate years. Further complicating your scenario is that the tax credit is phased out. In the second half of 2018 the tax credit is expected to be reduced to $3,750 and is currently forcasted by many to be only $1,875 if you take delivery in the first half of 2019. There will likely be no credit available after that.

 

[SageBrush]

Ok, sweet, so the articles I read today that I thought were clarifying this were actually still not entirely clear. So what I need to do is increase my income, thus my tax liability, to realize more of this credit.

Yes, but "income" is a poorly understood term.

E.g., If you reduce 401k savings this current year or convert prior 401k savings to a Roth, your tax liability increases.

 

[chronopc]

Let me give a few parting words of wisdom before I stay out of this thread...

One surefire way to increase tax liability is to make more money. Between now and the time you get a model 3, focus on doing that!

If you have secrets on how to do this I'm all ears.

 

[chronopc]

This guy does a good job of explaining the EV tax credit in his video.

 

[JeffK]

If you have secrets on how to do this I'm all ears.

Don't ask me, I'm banking on winning the Powerball haha. Although my math skills have told me to not even bother buying a ticket.

 

[SageBrush]

I went back to an old post of mine (with an error, of course) and post it here corrected. Perhaps it can form for the basis for a sticky after any needed further corrections:



Keep in mind that I am not a CPA, the number we are interested in is ~ line 56 of the Form 1040 when it comes time to apply the (maybe available) $7500 Federal EV tax credit.

So starting from line 56, and let's say the available EV credit is 'Z,' then:
Line 56 is 0: No EV credit is received
Line 56 > Z: Z is received
0 < Line 56 < Z: The amount in Line 56 is received

 

[SageBrush]

This guy does a good job of explaining the EV tax credit in his video.

Amusing, he made the same mistake I did the first time around. The extras taxes in lines 57-62 are not applicable to the EV tax credit.

 

[deonb]

Yes, but "income" is a poorly understood term.

E.g., If you reduce 401k savings this current year or convert prior 401k savings to a Roth, your tax liability increases.

Hasn't this been debunked? The EV tax credit is taken on the form before the conversion is done from IRA to Roth - so it doesn't actually work.