Tax credit 2023 [The tax credit discussion thread]

[Hoxlox]

In this scenario you are missing out on $3,500 as the $7,500 EV tax credit is limited to $4,000.

Oops, yes. You are right, it'll be a miss of $3,500.

 

[fholbert]

This is pretty clear:
View attachment 956090

That is the best document I've seen. Where did you find that?

 

[dm121721]

What happens in 2024 when the credit is applied right at the dealer at time of purchase and immediately subtracted from the cost?

If you dont have enough tax liability do you have to pay some of the $7500 credit back?

 

[Mike728]

What happens in 2024 when the credit is applied right at the dealer at time of purchase and immediately subtracted from the cost?

...

Has this been verified, or is it still just a rumor?

 

[dm121721]

All I've been able to find explaining anything about it is this:

Clean vehicle credit seller or dealer requirements | Internal Revenue Service

Sellers of eligible electric vehicles can help their customers take advantage of clean vehicle credits by registering with the IRS and meeting reporting requirements.

www.irs.gov

It looks like its going to happen but there are no rules yet.

 

[TRDFRG]

Has this been verified, or is it still just a rumor?

Starting in 2024, the Inflation Reduction Act establishes a mechanism that will allow car buyers to transfer the credit to dealers at the point of sale so that it can directly reduce the purchase price.

TAS Tax Tip: What the Inflation Reduction Act Means for You

The Inflation Reduction Act, which includes expanded or extended tax credits and additional funding for the IRS, was signed into law on August 16, 2022

www.taxpayeradvocate.irs.gov

Not really any detail provided. They probably are still working on the mechanism for that. I would almost guarantee that you'd owe the difference back to the IRS if your tax liability is lower than $7,500.

 

[SJordan]

Nothing on that page answers my actual question.

My understanding is that you are correct. It is not a deduction but rather reduces your overall tax liability by 7500.

 

[krishk24]

Hello - I am waiting for the next gen Model Y and would like to avail $7500 rebate. My wife and I file jointly and are not eligible for the rebate since we make more than 300 k per year.
could my in laws buy this car in their name to avail this credit and transfer the registration at a later time ?
I dont see a way of leasing a Model Y and then having the manufacturer apply $7500 rebate like what other car companies do - apparently Tesla requires all of their lease vehicles to be returned after the 36 months

Thanks for your suggestions and feedback

 

[RandyS]

I get your situation, but there are issues with the various different ways to accomplish this (insurance, DMV/titling, Tesla changing the name on the reservation, changing names on the car later, etc.)

Do your in-laws have at least $7500 in Federal tax liability? BTW, it isn't a rebate. They would need to have a tax liability of $7500 to get the $7500 back as a tax credit, and the IRS says you can't buy a car to get the credit and then sell it (which is what re-titling looks like), etc. Also, in order to avoid paying sales tax again when/if they transfer title to you, they would have to certify that the car is a family gift. There's a bit of dishonesty in those issues...

Sorry to mention this, but with much respect, maybe leave the tax credit for people who need the money so they can make an EV purchase? The income limits are there for a reason, not to skirt them...

 

[thptrek]

Reallly wish Tesla would pass the $7500 credit back to lease customers. At least a portion of it.

 

[EastCobbMYP]

I received $37,500 in EV Tax credits. I bought Nissan Leafs in 2015, 2017, 2019, 2020 and 2022. I will also get the $7,500 tax credit when I file my 2023 taxes next year for the 2023 Tesla MYLR I bought last month.

So...you traded the 2015 one in for 2017, then again traded for 2019 etc? Smart...

 

[Watts_Up]

So...you traded the 2015 one in for 2017, then again traded for 2019 etc? Smart...

But you should also deduct the sales tax (6% in Florida) and DMV registration (1 to 2%), and also the Tesla $1,200 delivery).
If you have a high mileage, changing car so often would certainly be worthwhile.

 

[Manoj12345]

Hi I have a question regarding 2023 tax rebate

i have purchased 2020 model 3 in 2019 october and received 1850 tax rebate

if i buy MODEL y this year , am i eligible for 7500 credit ?

Should i purchase on my wife's name

Thanks

 

[fholbert]

Hello - I am waiting for the next gen Model Y and would like to avail $7500 rebate. My wife and I file jointly and are not eligible for the rebate since we make more than 300 k per year.
could my in laws buy this car in their name to avail this credit and transfer the registration at a later time ?
I dont see a way of leasing a Model Y and then having the manufacturer apply $7500 rebate like what other car companies do - apparently Tesla requires all of their lease vehicles to be returned after the 36 months

Thanks for your suggestions and feedback

With a little planning most can get their adjusted income below $300k. Buy some property. Invest into your retirement! Max 401k per person is $21k to $30k depending on your age.

I spoke with "my guy" about this recently to assure I get the full $7,500.

 

[Mike728]

Hi I have a question regarding 2023 tax rebate

i have purchased 2020 model 3 in 2019 october and received 1850 tax rebate

if i buy MODEL y this year , am i eligible for 7500 credit ?

Should i purchase on my wife's name

Thanks

Your purchase back in 2020 has no impact on this years eligibility. If you meet the wage requirements, you're entitled to a credit of up to $7,500 during tax time. Do you and your wife file separately?

 

[Jerryr]

But you should also deduct the sales tax (6% in Florida) and DMV registration (1 to 2%), and also the Tesla $1,200 delivery).
If you have a high mileage, changing car so often would certainly be worthwhile.

Unfortunately, or fortunately not having a mortgage and relatively low real estate taxes the standard deduction far exceeds what I could claim by itemizing deductions so deducting sales tax etc won‘t work for us.

 

[Occhis]

Unfortunately, or fortunately not having a mortgage and relatively low real estate taxes the standard deduction far exceeds what I could claim by itemizing deductions so deducting sales tax etc won‘t work for us.

If you’re retired, and you have a traditional IRA or 401k you can withdraw a large enough amount that puts you in a tax situation so that you would owe at least $7500, and you would then be able to take advantage of the EV credit.

 

[dcfas]

If you’re retired, and you have a traditional IRA or 401k you can withdraw a large enough amount that puts you in a tax situation so that you would owe at least $7500, and you would then be able to take advantage of the EV credit.

Great thought. Thank you for posting this.

 

[jcanoe]

You can also convert part or all of a traditional IRA to a Roth IRA. When you convert to a Roth IRA this would generate income, income tax. Later, when you withdraw money from a Roth IRA no additional tax would be owed. The conversion to a Roth IRA would also result in state income tax being due (depending on where you live.)

 

[murphpl]

I find it hard to believe, but many people have told me no. These people purchased EV’s in the last few years and missed some or all the tax credit. As I understand it, in your example you lost out on the $3,500.

If I read the law on the IRS web site I’m 50/50.

I didn’t want to chance it, starting the 1st of this month I went exempt on my federal withholding. Right or wrong, everything will work out in the end.

Withholding is irrelevant to any rebate. It’s merely a “prepayment “ of taxes you will owe at end of tax year.