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Prices are slowly going up?
- Thread starter nlam514
- Start date
A tax CREDIT is not the same as getting cash back or a discount.
Knightshade
Well-Known Member
If you qualify for the full value (as the vast majority of 2018 buyers did per previous discussion), it's exactly the same as that other than if you pay sales tax on the amount of it or not.
Which I already accounted for in the math showing the 2018 remains over $2000 cheaper than the same config in 2021.
A tax credit only applies if you owe taxes at the end of the year.
New York gave me an instant $2000 off the sticker price, that is NOT a credit.
Knightshade
Well-Known Member
That's not quite correct- it offsets your tax liability.
It's entirely possible you can take the full credit even if you were going to get a refund without it and instead get a $7500 larger refund- depending how you set up your withholdings throughout the year.
In any event I literally addressed this in the post you are replying to, when I wrote "If you qualify for the full value"
I guess you missed where we covered that you only needed an income of $66,000 a year to be eligible for the full $7500 credit, and that something near 90% of everyone who applied for that credit got the full value?
Please stop. That's not how tax credits work. Tax credit only cut down on the amount of taxes you OWE. If you don't owe taxes or get a refund at the end of the year, you don't get a the $7500 tax credit.
"You must have a federal tax liability in the year you purchase an electric car or plug-in hybrid to claim the tax credit. The tax liability must meet or exceed the amount of credit you're requesting. If, for example, you owe $6,000 in federal taxes, you can only claim a credit of $6,000 – even if the vehicle qualifies for a full $7,500 tax credit."
The amount you make has nothing to do with if you owe taxes at the end of the year or not. I make more than $66,000 and I don't owe the government any money at the end of the year. If you owe money it means you didn't give enough in taxes during the year.
Knightshade
Well-Known Member
It's exactly how it works.
A credit reduces your tax liability. That's not the same as "how much you owe or how much your refund is" except if had NO withholdings and NO credit of ANY kind all year.
You could normally be entitled to a $3000 refund, then buy an EV that still has the $7500 credit, and get a $10,500 refund- depending on your LIABILITY for the year.
As long as you have at least $7500 liability you get the full $7500. Which an income of $66,000 would insure.
AFTER you figure your liability, THEN you look at your withholdings for the year and add the two together.
THAT is "how much you owe" or "how much your refund is"
You are confusing liability with "owe or refund"
Those are different numbers, computed differently, at different lines of the tax form.
Right.
LIABILITY.
This is NOT the "amount you owe or your refund"
That's a DIFFERENT amount,.
Uh- that's because your WITHHOLDING was GREATER than your LIABILITY.
Thus you get a refund of the difference.
This tells you nothing at all about eligibility for the credit.
How much your LIABILITY IS absolutely has everything to do with how much you make.
Then a bunch of OTHER numbers get applied after liability is determined to get to "how much you owe" or they owe you.
But here's a really simple example:
Let's say you withhold $0.00 all year somehow.
On $66,000 let's say you'd have a tax liability of $7500.
When you do your taxes, your liability line is $7500.
You offset this by your withholding of $0.
Now you "owe" $7500 (which is a different line on the form).
With me so far?
Ok, now let's say you had $8000 withheld from your salary.
You still have a $7500 liability.
You offset by your $8000 withholdings.
Now they "owe" you $500. Because you overpaid them. You get a $500 refund. Right?
In that second case, even though you don't "owe" them anything, you can still get the full $7500 tax credit
Because your LIABILITY is at least $7500.
In that case the math is:
$7500 liability.
$7500 tax credit
Net liability=$0
You still then add your withholding of $8000.
NOW your refund is $8000 instead of $500.
You got the full credit, despite the fact you didn't "owe" anything after withholding.
Clear yet?
The only time liability, and how much you owe (or they owe you) are the SAME number is in a year you had ZERO credits and ZERO withholding.
Which for most folks is basically never.
Last edited:
Knightshade
Well-Known Member
BTW for anyone who wants to see this in action on their own tax return-
Line 16 is your initial tax liability.
17 through 23 are various adjustments from credits and such (the EV tax credit would go here, as a reduction of your liability)
Line 24 is your "final" liability.
This is NOT "how much you owe in April" or "How much you get back in April"
Lines 25 through 33 then sum up how much you had withheld (or otherwise pre-paid your liability in various ways).
You then subtract one from the other (24 and 33) depending on which is larger- and THAT is what you "owe" or "are owed"
But this is totally irrelevant to getting the $7500 credit or not.
Line 16 is the one that matters (or arguably line 24, before you apply the EV credit- since you might have OTHER credits you are stacking here).
It needs to be greater than or equal to $7500 for you to be able to knock off $7500 from it.
Which for a typical person earning at least $66,000 in the year in question- it was.
No matter how much they had withheld, or not, because those figures DO NOT MATTER to this math.
Again- as already established by the IRSes own numbers, nearly 90% of everybody who took the EV credit got the full credit
Because generally people with very little income aren't buying brand new EVs.
So for all those folks, it's exactly the same as getting a cash refund--- minus the tiny sales tax difference already shown in the math.
Line 16 is your initial tax liability.
17 through 23 are various adjustments from credits and such (the EV tax credit would go here, as a reduction of your liability)
Line 24 is your "final" liability.
This is NOT "how much you owe in April" or "How much you get back in April"
Lines 25 through 33 then sum up how much you had withheld (or otherwise pre-paid your liability in various ways).
You then subtract one from the other (24 and 33) depending on which is larger- and THAT is what you "owe" or "are owed"
But this is totally irrelevant to getting the $7500 credit or not.
Line 16 is the one that matters (or arguably line 24, before you apply the EV credit- since you might have OTHER credits you are stacking here).
It needs to be greater than or equal to $7500 for you to be able to knock off $7500 from it.
Which for a typical person earning at least $66,000 in the year in question- it was.
No matter how much they had withheld, or not, because those figures DO NOT MATTER to this math.
Again- as already established by the IRSes own numbers, nearly 90% of everybody who took the EV credit got the full credit
Because generally people with very little income aren't buying brand new EVs.
So for all those folks, it's exactly the same as getting a cash refund--- minus the tiny sales tax difference already shown in the math.
CapeOne
Active Member
For a single person. For a married couple filing jointly it would be need to be around $91k.
Knightshade
Well-Known Member
Well, yes- but as the earlier link mentions, nearly 80% of those taking the credit had incomes over $100,000 so apparently not a ton of low-income married couples bought a Tesla in 2018
Count me in the minority. Active military so my taxable income is low, wife's retired military with combat related injuries from Iraq so her income is tax free. If the tax credit comes back it's worth $0 to me. If the prices were jacked up to compensate for it I would have been looking real hard at other cars.
Knightshade
Well-Known Member
I'm not saying that's the most ridiculous miss the point analogy I've seen here, but it's at least honored to be nominated for it.
"Tesla loses huge customer for emissions credits in Europe and the US. Stellantis paid Tesla $2.4 billion for credits between 2019-2021."
"This would eliminate the need for at least some of the payments to Tesla, whose proceeds from the lucrative sale of regulatory credits hit a record $518 million in the first quarter."
"Regulatory credit revenue probably will rise to $2 billion from about $1.4 billion in 2020, analyst Dan Levy predicted in a note previewing Tesla’s quarterly earnings Wednesday. He wrote that his estimate for 2021 is higher than consensus of $1.3 billion."
Tesla loses huge customer for emissions credits in Europe and the US
Stellantis paid Tesla $2.4 billion for credits between 2019-2021.
arstechnica.com
Knightshade
Well-Known Member
"Tesla loses huge customer for emissions credits in Europe and the US. Stellantis paid Tesla $2.4 billion for credits between 2019-2021."
"This would eliminate the need for at least some of the payments to Tesla, whose proceeds from the lucrative sale of regulatory credits hit a record $518 million in the first quarter."
"Regulatory credit revenue probably will rise to $2 billion from about $1.4 billion in 2020, analyst Dan Levy predicted in a note previewing Tesla’s quarterly earnings Wednesday. He wrote that his estimate for 2021 is higher than consensus of $1.3 billion."
Tesla loses huge customer for emissions credits in Europe and the US
Stellantis paid Tesla $2.4 billion for credits between 2019-2021.
What's weird is the headline says they're losing them as a credit customer in the US and Europe.
But the actual quote from their CEO says they will ONLY stop buying them in Europe.
This link does a bit better reporting on this:
Tesla Just Lost One of Its EV Credit Buyers. What That Means for the Stock.
Stellantis—the company that resulted from the merger of Fiat Chrysler and Peugeot—isn’t going to buy emissions credits from Tesla any longer. Here’s what that means for the EV giant.
www.barrons.com
"Stellantis only appears to affect European credit purchases"
and
"Stellantis CFO Richard Palmer said recently his company spent roughly $350 million on all credits from Tesla in 2020"
Also note they say 'Stellantis expects to be compliant on its own in achieving CO2 targets in Europe for 2021"
To paraphrase a famous Spartan.... EXPECTS.
Knightshade
Well-Known Member
"owing" or not has nothing to do with if you get the full credit or not- as explained earlier in some detail.
While inflation IS a thing, it's not enough of a thing to REMOTELY cancel out 33% cut in the value of the credit between when you take delivery and the minimum of 1-3 months or max of 12-14 months later when you do your taxes in the example you used.
That said, a lot of the talk around a new credit is exactly on doing a point of sale rebate, in part because of how badly so many seem to misunderstand how the credit works otherwise.
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