Tax credit 2023 [The tax credit discussion thread]

[Jerryr]

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.

I have enough tax liability and meet the income guidelines to claim the full federal tax credit.

I was replying to a posting about deductions not credits. The post was about 6% sales tax being deductible. I file with standard deduction because I don’t have enough deductions for it to make sense to itemize.

It drives me crazy when friends don’t understand how a tax credit works and how deductions work. I can’t count the number if times I’ve been told that they don’t owe enough at the end of the year to take advantage of a tax credit. Then I explain last year when I bought a Leaf, a qualifying EV, I got a refund of $6,800 instead of owing $700. They still don’t either believe it or get it.

 

[Manoj12345]

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?

Thank you Mike, we file jointly , any benefit filing seperately , the 2019 purchase lists both as owners

 

[mjwojtukiewicz]

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.

Next year is my first RMD so I will be using it to buy probably a Highland model 3

 

[Joe2765]

I was just looking at the IRS web page for the tax credit and noticed that it said that Tesla needs to supply the necessary purchase info and tax ID number to the IRS and you in order for you to be able to obtain the tax credit when you file your 2023 taxes.

I remember asking the delivery guy about tax credit and he said that Tesla would be submitting the info when tax season came along.

But I don't remember giving Tesla my Tax ID Number and it does not seem to be listed on any of the documents on my Tesla account.

Did any of you supply your Tax ID Number when making the purchase?

Thanks.

Joe

 

[fholbert]

I was just looking at the IRS web page for the tax credit and noticed that it said that Tesla needs to supply the necessary purchase info and tax ID number to the IRS and you in order for you to be able to obtain the tax credit when you file your 2023 taxes.

I remember asking the delivery guy about tax credit and he said that Tesla would be submitting the info when tax season came along.

But I don't remember giving Tesla my Tax ID Number and it does not seem to be listed on any of the documents on my Tesla account.

Did any of you supply your Tax ID Number when making the purchase?

Thanks.

Joe

Yes, May 5th delivery.

I thought it was strange at the time, but now understand it.

 

[SJordan]

Then I explain last year when I bought a Leaf, a qualifying EV, I got a refund of $6,800 instead of owing $700. They still don’t either believe it or get it.

This is surprising as everything I have read and been told by tax accountants is that "The credit is nonrefundable; it can lower your tax bill to zero, but it won’t result in a refund."

 

[Mike728]

This is surprising as everything I have read and been told by tax accountants is that "The credit is nonrefundable; it can lower your tax bill to zero, but it won’t result in a refund."

You can only get back what your fed liability is, up to $7,500. Some people here seem to think that not paying federal tax throughout the year is the only way to get the money. That would be ridiculous if it were true.

 

[brkaus]

You can only get back what your fed liability is, up to $7,500. Some people here seem to think that not paying federal tax throughout the year is the only way to get the money. That would be ridiculous if it were true.

A reasonable percentage of the population is ridiculous.

 

[ItsNotAboutTheMoney]

This is surprising as everything I have read and been told by tax accountants is that "The credit is nonrefundable; it can lower your tax bill to zero, but it won’t result in a refund."

That is tax accountants speaking tax accountant language and is confusing. Or you misunderstood because they confused you.

The key question is not the refund, but how much you benefit.

Refund is <Amount you actually paid in taxes> minus <Amount you should have paid in taxes>.

So neither a refundable or non-refundable credit is guaranteed to result in a refund (the government sends you some money), because you might have underpaid taxes substantially.

The unfortunate thing is that credits are called "refundable" and "non-refundable". It's misleading. They should have different names.

Non-refundable -> "Liability credit": reduces <Amount you should have paid in taxes> (tax liability). But liability can't be below zero..
Refundable -> "Payment credit": Increases the <Amount you actually paid in taxes>. It acts like a tax payment. Taxes paid can go up very high.

The key limitation of a non-refundable credit is that because it can't reduce liability below zero, you might not get the full benefit of it.

Simplifying, on the 2022 1040, Line 22, what would that number be without the EV tax credit included?
The max you could have benefited is the lower of that number and the EV tax credit amount.

 

[Jerryr]

This is surprising as everything I have read and been told by tax accountants is that "The credit is nonrefundable; it can lower your tax bill to zero, but it won’t result in a refund."

Non-Refundable means you only can get a credit up to your tax liability. Tax liability is total tax calculated based on taxable income, not whether you have underpaid throughout the year with withholding.

 

[finout]

I spoke (chatted) with two separate Tesla sales people today. The $7,500 which should be available to the lessor doesn't seem to be with Tesla. I'm in Colorado, and they include a $5,000 discount for the Colorado tax incentive but not for the federal tax incentive. I asked about that and they said none of Tesla's vehicles qualify for a credit with their lease program. That sounds like either they are keeping the tax credit, Tesla is misinformed, or all of the articles written about this issue (That the Model 3 and Y should be eligible for a lease-based tax credit regardless of income) are wrong.

 

[Macgruber]

When I have time I'll try to read through 26 pages in this thread but was wondering if somebody could help me answer this question:

I just reserved a new inventory model Y and I will be paying cash. Unfortunately my wife and I do not quality for the $7500 tax credit due to income limits. This leaves me with 3 options that I can come up with
1. Can I bring my mother and put her on the title with me? She can then claim the tax credit when she files next year? She will have no fiscal responsibility.
2. My wife and I file separately when we go to file our taxes. Do you think $7500 trumps the tax benefits of filing jointly? (i know this is a broad question)
3. Do nothing and let the tax credit go.

 

[Mike728]

3

 

[frankvb]

I spoke (chatted) with two separate Tesla sales people today. The $7,500 which should be available to the lessor doesn't seem to be with Tesla. I'm in Colorado, and they include a $5,000 discount for the Colorado tax incentive but not for the federal tax incentive. I asked about that and they said none of Tesla's vehicles qualify for a credit with their lease program. That sounds like either they are keeping the tax credit, Tesla is misinformed, or all of the articles written about this issue (That the Model 3 and Y should be eligible for a lease-based tax credit regardless of income) are wrong.

Indeed, they are simply not passing the federal tax credit on to the customer and keep the $7.5K. There is no rule that forces them to pass that money on to the lessee. Note that (at least) BMW does the same except for the lowest i4 spec (at least a few months ago).

 

[tradosaurus]

When I have time I'll try to read through 26 pages in this thread but was wondering if somebody could help me answer this question:

I just reserved a new inventory model Y and I will be paying cash. Unfortunately my wife and I do not quality for the $7500 tax credit due to income limits. This leaves me with 3 options that I can come up with
1. Can I bring my mother and put her on the title with me? She can then claim the tax credit when she files next year? She will have no fiscal responsibility.
2. My wife and I file separately when we go to file our taxes. Do you think $7500 trumps the tax benefits of filing jointly? (i know this is a broad question)
3. Do nothing and let the tax credit go.

1. If your mother pays at least $7500 in taxes each year she would be able to claim the full tax incentive.
2. Look at the individual income limit.
3. You are not letting the tax credit go if you don't qualify.

If you're single and your modified adjusted gross income is over $150,000, you won't qualify for the EV tax credit. The EV tax credit income limit for married couples filing jointly is $300,000.

Good luck.

 

[feard]

When pricing Model Y for the lease option on website, is the $7500 EV credit baked into the formula that provides the monthly lease payment? In another words, am I getting the EV credit immediately on a Tesla lease? I was told in the store that I was getting it but I can't find it anywhere.

Thank You!

 

[Kairide]

When pricing Model Y for the lease option on website, is the $7500 EV credit baked into the formula that provides the monthly lease payment? In another words, am I getting the EV credit immediately on a Tesla lease? I was told in the store that I was getting it but I can't find it anywhere.

Thank You!

The price you get when you finalize the lease would include the $7500 Federal Tax Incentive. Since you’re leasing, Tesla gets the incentive, not you. If they’re passing any savings on the the customer, is unknown.

 

[EatsShoots]

I was just looking at the IRS web page for the tax credit and noticed that it said that Tesla needs to supply the necessary purchase info and tax ID number to the IRS and you in order for you to be able to obtain the tax credit when you file your 2023 taxes.

I remember asking the delivery guy about tax credit and he said that Tesla would be submitting the info when tax season came along.

But I don't remember giving Tesla my Tax ID Number and it does not seem to be listed on any of the documents on my Tesla account.

Did any of you supply your Tax ID Number when making the purchase?

Thanks.

Joe

I can't bet my life on the fact I gave my social security number. I can bet my life on the fact that when I was going through predelivery in the app one section said I needed to confirm/enter some confirmation of my intent to file this credit and that if I didn't do so now it wouldn't be possible to go back and do it later. So it may have been SSN, but it would have been one of the mandatory steps in the submission there. As for tesla's claim that if you declined that are you SOL on the $7500 I can't say for sure. Seems pretty onerous if true.

This is surprising as everything I have read and been told by tax accountants is that "The credit is nonrefundable; it can lower your tax bill to zero, but it won’t result in a refund."

He's correct, but so are the people who are saying your withholding is irrelevant. See post #502

I spoke (chatted) with two separate Tesla sales people today. The $7,500 which should be available to the lessor doesn't seem to be with Tesla. I'm in Colorado, and they include a $5,000 discount for the Colorado tax incentive but not for the federal tax incentive. I asked about that and they said none of Tesla's vehicles qualify for a credit with their lease program. That sounds like either they are keeping the tax credit, Tesla is misinformed, or all of the articles written about this issue (That the Model 3 and Y should be eligible for a lease-based tax credit regardless of income) are wrong.

For leases the person who owns the car gets that $7500, so that would be tesla, or if you leased a nissan leaf it would be nissan. They are getting that money. Whether they in turn apply it against the car to reduce capitalized cost is up to them ultimately and up to you whether you want to buy it if they decide not to.

I'm a fairly big proponent of leases in some circumstances but slowly souring on them. For one thing it's become increasingly difficult to unwind from a lease mid-lease, even if you have equity. No idea about tesla but a lot of brands now explicitly prohibit third party payouts, which makes trading into carmax, for example, actually impossible.

 

[flixden]

I can't bet my life on the fact I gave my social security number. I can bet my life on the fact that when I was going through predelivery in the app one section said I needed to confirm/enter some confirmation of my intent to file this credit and that if I didn't do so now it wouldn't be possible to go back and do it later. So it may have been SSN, but it would have been one of the mandatory steps in the submission there. As for tesla's claim that if you declined that are you SOL on the $7500 I can't say for sure. Seems pretty onerous if true.

Yes, it's the section that asks for the SS number which also says basically "do it now or never".
I stopped there and researched, finding the IRS requirement for the car maker to submit the purchasing information under your name.
That's when I went back and gave Tesla my SS#, even though I am usually super careful with that. But with $7.5k potentially at risk, I did it.

The problem would come in when the IRS doesn't accept returns claiming the rebate without a match in their database, but I don't know if the IRS will do that. I am sure we'll hear about it here next spring, if that's the case.

 

[napsfolyfe]

@Ray_R What text number are you referring to? The one you received delivery updates from? It would be great to get similar assurances.

I took delivery last week, but didn't get a tax credit report/form. It's not in my documents online.
Also, Tesla doesn't have my SSN, since I didn't finance with them. So I'm not sure how this is supposed to work.
I tried Chat a few times. When I was told anything at all, it was that "my Purchase Agreement was all that was needed and my CPA would know what to do." Well, not quite...

IRS Fact Sheet FS-2023-04, February 2023

Topic A. Q1. ...for a taxpayer to claim the credit, the seller of a new clean vehicle must provide a report containing taxpayer and vehicle information to the taxpayer and to the IRS. See Topic B FAQs 7-9 for additional detail.

Topic B. Q8. ...A seller must provide the following information on a report to the taxpayer and to the IRS:
•Name and taxpayer identification number of the taxpayer (Didn't finance. They don't have my SSN.)
•Other things...
Q9. When must the seller provide the report to the taxpayer?
The seller must provide the report to the taxpayer not later than the date the vehicle is purchased.

Friday's updated FS-2023-08, March 2023 did not change these requirements.

I asked a similar question was just wondering if you got an update to your request. we also didn't finance so the whole SSN thing applies to me as well so just curious.