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Tax credit - based on prev year MAGI or year of purchase?

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Where are you getting the $53,215 from? You would have to make significantly more than that to have a $7,500 Fed tax liability. And that assumes no 401k/IRA contributions or any other deductions besides the standard deduction.
Sorry. I see the site calculator is obsolete with the year 2016! It's just an illustration to understand the principle of how different credits can affect the rich and the poor. You then can apply the details for each different scenario (and the year).




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You are correct! Here's the newer site for 2021 with the threshold of $65,968:



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It's just an illustration to understand the principle of how different credits can affect the rich and the poor. You then can apply the details for each different scenario.




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I see, you are basing it off of the 2016 tax code. Standard deduction and tax rates are very different now compared to 2016 after the changes made by Trump.
 
I don’t see how it would be allowed to be assigned to the dealer if you don’t qualify for the credit. Assigning it to me would mean your making it payable to the dealer but you would still have to meet all the criteria to qualify for the credit. I understand that isn’t available until 2024. At that point I don’t see why anyone would choose not to assign it to the dealer. You get all the money right away and you don’t have to worry about the tax liability being less come tax time. Am I missing something?
 
I don’t see how it would be allowed to be assigned to the dealer if you don’t qualify for the credit. Assigning it to me would mean your making it payable to the dealer but you would still have to meet all the criteria to qualify for the credit. I understand that isn’t available until 2024. At that point I don’t see why anyone would choose not to assign it to the dealer. You get all the money right away and you don’t have to worry about the tax liability being less come tax time. Am I missing something?

Correct. I think it will be an option in 2024 for either 1) Point of Sale credit or 2) wait until next year to claim your credit. Of course, I would not want to wait till next year if I am eligible.

The Treasury link of FAQ says:

"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."

I think they will specify how the income verification will be done by that time.
 
Correct. I think it will be an option in 2024 for either 1) Point of Sale credit or 2) wait until next year to claim your credit. Of course, I would not want to wait till next year if I am eligible.

The Treasury link of FAQ says:

"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."

I think they will specify how the income verification will be done by that time.
That would essentially make it a fully refundable credit. Unless they are going to make it fully refundable my speculation is as follows:

They use previous year tax liability and income to determine the refund amount that can be assigned to the dealer OR you can wait until tax time and claim the credit using current year tax income and liability info.

Pure speculation but that would make more sense. Otherwise it may as well be a pure POS credit on 1/1/24
 
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That would essentially make it a fully refundable credit. Unless they are going to make it fully refundable my speculation is as follows:

They use previous year tax liability and income to determine the refund amount that can be assigned to the dealer OR you can wait until tax time and claim the credit using current year tax income and liability info.

Pure speculation but that would make more sense. Otherwise it may as well be a pure POS credit on 1/1/24
They will take public comments before they finalize the procedure for 2024.

"The Internal Revenue Service and the Department of the Treasury will post information and request comments from the public on various existing and new tax credits in the coming weeks and months, including on further changes to eligibility rules for clean vehicle tax credits."

Since it is a tax credit, I don't think it will be based on the prior year's tax. It should be the year of the car delivery.

However, most taxpayers don't have drastic income fluctuations from year to year so it's reasonable to use past taxes as an imperfect prediction for the current year. The Point of Sale could ask for your most recent paystub and they can multiply that to the rest of the year's paystub to predict your year's income too.

Or when you sign to take the credit at the Point of Sale, there won't be any need for income verification: You just promise that will be your income and if it will be more in the future, you will return any excess/ineligible credits back to the IRS. That's the same principle to register for Federal voter registration: No need for any paperwork verification: The signer just signs the promise to go to jail if not a citizen.