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Questions, and did you "receive" the full $7,500 tax incentive?

Discussion in 'Model S: Ordering, Production, Delivery' started by gnychis, Nov 17, 2013.

  1. gnychis

    gnychis Member

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    I've done a lot of searching on this, and I'm still confused. I understand that the $7,500 is a tax credit and not a refund. I won't get a $7,500 check or rebate, but if my total taxes exceed $7,500 that it will deduct from this amount? But, then I was confused even more by something someone posted on autotrader:



    That seems VERY different in terms of a statement. Did you receive the full $7,500 tax incentive. If so, how does it show? There more I search online about this, the more I seem to become confused by others that are confused.
     
  2. NuclearPowered

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    The $7500 is a tax CREDIT which means you will deduct the full $7500 directly off the tax you owe the gov't. It is not a deduction.

    Plug-In Electric Drive Vehicle Credit (IRC 30D)

    i.e. My taxable income is $100,000. The effective rate is approx 21% meaning I owe $21,000 to the Fed Gov. I am credited $7500 and pay only $13,500.
     
  3. Lloyd

    Lloyd Active Member

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    That is correct.... If you pre paid your taxes through payroll deductions, or quarterly payments in excess of 7500, and you submitted the tax credit paperwork, then you would recieve a check from the government on the credit balance left after all of the taxes were paid.
     
  4. David Rhee

    David Rhee Member

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    Take a look at the IRS form 8834.
     
  5. N4HHE

    N4HHE Member

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    In years past many complained loudly that their hybrid tax credit was wiped out by the AMT, Alternate Minimum Tax.
     
  6. Gizmotoy

    Gizmotoy Active Member

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    Can you elaborate? If you pay AMT, the credit is invalidated? Or was it just that some people had to pay AMT due to their income, and the higher rate was greater than the credit? I know AMT essentially invalidates deductions, but this isn't a deduction, it's a credit.
     
  7. ckessel

    ckessel Active Member

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    Yep, got a big check back from the IRS since the $7500 went directly against my tax liability. Though I'm not nearly well enough off to deal with AMT, so I have no idea what happens when that kicks in.
     
  8. Owner

    Owner Active Member

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    Also because it is a credit, does not work well with stock gains. Need 'income' from a job, dividends or interests. Something to consider if you are not working. :biggrin:

    --- Legal disclaimer -- I am not a tax consultant or lawyer or anything official.
     
  9. montgom626

    montgom626 Active Member

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    Works fine with any source of income.
     
  10. crmohler

    crmohler Member

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    I've been a victim of AMT for many years now. I'm getting home solar and the Tesla this year which will give me tax credits of over $30,000. Before purchasing both, I asked my CPA if I would still benefit from the tax credits given that we pay substantial AMT. He said we will still get the full credit. We live in California, land of tax. I sure hope he's right....
     
  11. wycolo

    wycolo Active Member

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    Keep in mind that the $7500 deduction is the LAST thing you do on the 1040 form. AMT, capital gains etc is all done beforehand. And of course, if you only have $4500 due then you will pay zero $ to the US Treas but get nothing back from them (NO $3000 refund check in the mail).
    --
     
  12. liuping

    liuping Active Member

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    #12 liuping, Nov 18, 2013
    Last edited: Nov 18, 2013
    The EV credit for 2012 tax year was specifically not affected by AMT. Who knows what changes they will make to it in the future.
     
  13. ckessel

    ckessel Active Member

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    If you only have $4500 in liability, that's true. You'll get a refund if you had more in $4500 tax liability, which would be the case for most people.

    I.e. you don't have to owe the IRS come tax time to make the credit work.
     
  14. ZBB

    ZBB Emperor

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    I am always amazed that people don't understand the difference between the amount of tax paid (ie the tax liability...) and any refund or amount due when they file taxes each year...

    Here's how the US income tax system works...
    1) An income tax is owed on most sources of income (working, selling things, investment gains, etc).
    2) The tax liability is calculated when people file their annual tax return (ie a "1040", due Apr 15 most years) -- which looks at the prior year (ie the 2013 income tax return must be filed by Apr 15, 2014, and can't really be filed much before early Feb 2014 since employers and financial institutions are given to either Jan 30 or Feb 15 to provide reporting to the IRS and the individual). This form goes through all sources of income, allows for deductions, and then applies the tax rate(s) to come up with the amount of taxes owed.
    3) Taxpayers are required to estimate their taxes and make payments during the year. For most people, this is deducted from an employer's paycheck. For self employed or for people with other income in excess of what they make through an employer, quarterly estimated taxes must be paid.
    4) The 1040 compares the tax liability against the pre-paid taxes. If you pre-paid more than your liability, you get a refund. If you under-paid, you have to pay the difference (and there can be penalties for underpaying by too much -- so most tax guides suggest that you should try to estimate your taxes so that you get a small refund (a big refund means that you gave the US government an interest free loan)... Basically this is a true-up.

    So if you get a refund, it doesn't mean that you didn't pay taxes -- all it means is that you overpaid your estimated tax liability -- and the annual true-up resulted in the gov't owing you money back.

    I'm not a tax adviser, and the actual process is much more complicated than that. In the case of this tax credit, its a credit against the tax liability -- so most people will end up with a refund (unless they either modified their payroll withholding or payed less in estimated taxes to adjust for the credit...).
     
  15. liuping

    liuping Active Member

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    I got solar and an EV last year (though it was a Volt instead of a Tesla). Both the Solar and EV tax credits are not affected by AMT.

    Many other credits are though. For example the credit for installing a EVSE is effected by AMT, so it was useless for me.

    - - - Updated - - -

    That would only be true if you paid $0 in taxes the rest of the year. Most people pay either by payroll deductions or estimates taxes through out the year.

    The $7500 is subtracted from the total amount of tax liability for the year in which the car was purchased, not the amount due on April 15th. This seem to confuse a lot of people I've talked to.
     
  16. neroden

    neroden Happy Model S Owner

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    I've always been amazed that people were confused by this, but then I've always had income from stocks (where there is no withholding, and you pay it in estimated tax or in April).
     
  17. montgom626

    montgom626 Active Member

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    The EV credit cannot be carried over to the next year. Use it or lose it. I think the solar credit can be carried over to the next year.
     
  18. dsmith2189

    dsmith2189 Active Member

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    As an example: when I did my taxes last year my EV credit ended up being $7466 and not the full $7500. oooh so close...
     
  19. GDH

    GDH Banned

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    I wish I qualified for the 7500, I'll be lucky if I get 5k back
     
  20. liuping

    liuping Active Member

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    I'm always surprised when I hear people buying a $90k+ car saying they don't have at least $7500 tax liability. That's only about $50k of taxable income (at 15% tax rate). I clearly need some better tax deductions... :smile:
     

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