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Okay, so there is one really poor person buying a model S.

Discussion in 'Model S: Ordering, Production, Delivery' started by Jhall118, Oct 11, 2012.

  1. Jhall118

    Jhall118 Member

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    #1 Jhall118, Oct 11, 2012
    Last edited: Oct 11, 2012
    Hey I mostly lurk these forums for information, but now I need some help!

    I am about to reserve my Model S (want to take delivery around/after next Christmas). I am a 24 year old just recently graduated student that makes about 33,000 a year. I'm going to pay 90-100% cash for my Model S. However, I am one of the few people that isn't going to have 7500 dollars in tax liability no matter what.

    Beyond maxing out my deductions and selling all my Tesla stock I bought at the IPO (at hopefully a profit) and that being taxed, is there anything else I can do that will benefit me and raise my tax liability?

    Believe it or not, if you Google "how to raise your tax liability" there's not a lot of articles :) I am married, but my wife is an engineering student that won't really be making money (she is on full ride scholarship+financial aid).

    Any ideas for me to research?

    P.s. I saved the money by riding my stupid bicycle up the hills of Seattle my entire college life, and not blowing it on booze. Cheap to the extreme. I don't want to buy a stupid house, because I prefer living in a small apartment and not hog natural resources (and a house doesn't go 0-60 in 4.4 seconds. :)
     
  2. stAtrill

    stAtrill New Member

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    If it helps put things in perspective, I just turned 20 years old and I completely envy you. I would love to be in your shoes. :)

    Best of luck sir! You are already ahead of the curve.
     
  3. palmer_md

    palmer_md Member

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    If they offer leasing by then, you could lease to get the full benefit of the rebate, then just payoff the lease and buy the car (with some other loan if you have to). Some folks did this with the Leaf. They called it a one payment lease.
     
  4. Jhall118

    Jhall118 Member

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    I don't have a whole lot of credit history though. I have a perfect record, but not a lot of huge purchases. I would imagine a 100,000 dollar lease for me would be kind of hard to get approved. That's why I am prepared to make as big of a down payment as I need to, in order to qualify for fancy 2% financing. Good idea to look into though.
     
  5. FlasherZ

    FlasherZ Sig Model S + Sig Model X + Model 3 Resv

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    As far as I recall, the tax credit is a full credit, not a deduction. The difference is that if your tax liability is < $7500 you get the rest in the form of a refund, yes?
     
  6. timdorr

    timdorr Model S P1698 / VIN 1657

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    It's a credit on the tax you owe. If you don't have more than $7500 in taxes generated on the federal level in the year you buy the car, you don't get the extra amount.
     
  7. Jhall118

    Jhall118 Member

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    It's non-refundable credit. You won't get a refund.
     
  8. Lloyd

    Lloyd Active Member

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    Flasher, no that is not correct. If your tax liability is <$7500 Federal, you will pay $0, and the rest of the credit is unavailable to you.
     
  9. ckessel

    ckessel Active Member

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    Depending on your situation, you could have your parents buy the car (they presumably have the necessary tax liability) and add you as a co-owner. You pay them obviously, but given the $7500 credit the car would be cheaper overall if they bought it. Eventually they drop their name off the title.
     
  10. Jhall118

    Jhall118 Member

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    That's a good idea. Thanks! Not sure if my parents would help me out. They think it's impractical, but maybe they would change their minds if they drove one, but they live in Utah. However, I have a close friend that I think I could work something out.
     
  11. Discoducky

    Discoducky Active Member

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    Correct, so you will get some money back or you'll get the whole thing if you end up owing more than $7500
     
  12. PhatCat

    PhatCat Kisco Kid

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    Of course, we don't know what leasing options Tesla will offer. However, in the past, leases I've done have offered a discounted rate for prepaying all the lease payments up front, which I did. Although I could have bought the car outright, I was pretty sure I wanted a new car after three years and didn't want to go through the hassle of selling it or trading it.

    Since you anticipate having the cash to make a big down payment, a pre-paid lease would seem to be a natural thing for you to consider. This would be a win-win for you and Tesla/Leasing Company. Tesla sells a car. The leasing company has no credit risk on your payments. The leasing company should realize the tax credit and factor it as a cap cost reduction, which is the leasing equivalent of a down payment and will reduce your monthly payment. You get the "perfect" payments on your credit record. And best of all for you, you would only need to pay for the portion of the car you intend to use. For example, if you want to use the car for five years, you can pay only for that much depreciation and the financing for that amount.

    And you get to turn it in without hassle as long as you keep it in good conditional and don't exceed the contracted mileage. The latter is very important as they kill you for mileage over. This is pretty much like a cell phone data contract, so you need a pretty good estimation on the maximum miles you will drive each year. Don't forget to factor the Tesla Grin into that.:biggrin:
     
  13. steve841

    steve841 Active Member

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    Hold up!

    According to my CPA, the $7,500 is a credit. Which, according to him, is a credit to you. If you owe, that mount is deducted from the $7500. If the IRS owes you, it's $7500 + whatever is due back, say $1500 ...so you'd get back $9000.
     
  14. gg_got_a_tesla

    gg_got_a_tesla Model S: VIN P65513, Model 3 Res Holder

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    You've got a dodgy CPA there.

    The Ins and Outs of Electric Vehicle Tax Credits - Edmunds.com

     
  15. aviators99

    aviators99 Model S - R140

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    #15 aviators99, Oct 11, 2012
    Last edited: Oct 11, 2012
    This is certainly wrong, but I don't think your CPA is necessarily dodgy. In fact, there is no way you could get away with getting more back than you owe, because it would be flagged as an error without even an audit (like math errors are). He's probably confused because the EV credit is termed "non-refundable", which means the opposite of what he said.

    In any case, back to the OP's question: Do you have a house with a mortgage? Sorry, just read OP: Do you own your apartment with a mortgage?
     
  16. bonnie

    bonnie Oil is for sissies.

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    But if I've paid $20k through payroll taxes and my final tax bill is $10k, then I should get the difference back plus $7500. You can still get a refund, even with a high tax bill. Your tax bill, independent of what you've already paid, is reduced by up to $7500. Then that final tax bill is subtracted from what you've paid. It's still a credit and can increase the size of your refund.

    But, on the other hand, if you don't owe anything in taxes to begin with, then you cannot claim a bonus of $7500.
     
  17. domenick

    domenick Nerd

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    With something like this, it's wise to keep it in the family. You could tell your folks that you are considering an arrangement like this with a friend, and then try to get them to do it instead.
     
  18. aviators99

    aviators99 Model S - R140

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    Yes! In that case you would get $17,500. But if your final tax bill was $7,000, you would only get $20,000 back (not $20,500).
     
  19. bonnie

    bonnie Oil is for sissies.

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    Exactly. Need to separate 'getting refund because of overpayment in payroll taxes' from 'total tax owed'. The credit is against total tax owed, nothing to do with any refund you might be getting.
     
  20. aviators99

    aviators99 Model S - R140

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    Also, OP is making an assumption that the tax credit will still be available next year (or the year after if his car is delayed one month).
     

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