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Tax Credit Clarification
- Thread starter SmarterMotors
- Start date
SageBrush
REJECT Fascism
When is the last time you saw an internal combustion car run on wind or PV ? Which is the cheaper fuel -- a gallon of fossil fuel or 33 kWh of PV ?
Imagine yourself the CEO of Exxon. Do you really want your customers to swap into appliances that preferentially (as in more cheaply) use your less profitable fuel; or even worse, one you do not sell at all ?
You should also consider that EVs are often a catalyst for other movement away from fossil fuels. Owners put up local PV and find it easier to be a political shade of green.
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In many places putting up PV goes beyond politics. On NPR I heard a story on the solar revolution going on in the Southwest the other day. They interviewed a guy who is installing solar in a town of mostly retired people in Arizona. He said 25% of the houses already have solar and most of his customers are Republicans.
He said it typically starts on the golf course where one person is griping about their summer electric bill being $400 and someone chimes in that theirs was only $30 last month and the conversation goes from there.
There is a glut of natural gas in North America right now and the producers would be happy to sell more of it, though little of it actually passes through Exxon's hands (or bank accounts). Some of the oil can gas being produced is owned by major oil companies, but quite a few plays are owned by smaller companies you've never heard of. Most natural gas produced on a lease owned by Chevron or Exxon will be sold into the North American natural gas market, though some is used to heat water in the oil field for secondary recovery or other uses. At one point Arco was turning natural gas produced on the North Slope into fertilizer because that was the only way it could be shipped anywhere, though that was back in the 80s and there is a pipeline for natural gas now.
Natural gas produced by the independents running oil and gas fields goes directly into the natural gas distribution system and the majors don't see a dime of it. The companies that have their own gas stations will buy gasoline from many sources. In most regions, there is one supplier of gasoline and most of the gas stations in the area sell gasoline from the same refinery, sometimes with slightly different additives.
For example in Oregon and Washington, most of the gasoline comes from the BP refineries in the Seattle area. Everybody but Chevron buys gasoline from BP and puts their own name on it. Chevron sells gasoline from their Richmond, CA refinery in the NW. Chevron is usually a bit more expensive in large part because of the distance it needs to travel.
BP buys the gasoline they sell from other refiners in different regions.
In any case, back to the topic, it's common that people will buy an EV then soon after start thinking about installing solar. I'm giving it some thought about the distant future, but it's more expensive here and has a slower return on investment than a lot of other areas of the country. It's expensive because demand is low and there are fewer people doing installations. When electricity is $0.08/KWh and the winters are dark with a lot of cloud cover for many weeks at a time, it isn't really worth it.
In a lot of other regions, having rooftop solar makes a lot of sense and buying an EV is a "gateway drug" that gets people thinking about it.
He said it typically starts on the golf course where one person is griping about their summer electric bill being $400 and someone chimes in that theirs was only $30 last month and the conversation goes from there.
There is a glut of natural gas in North America right now and the producers would be happy to sell more of it, though little of it actually passes through Exxon's hands (or bank accounts). Some of the oil can gas being produced is owned by major oil companies, but quite a few plays are owned by smaller companies you've never heard of. Most natural gas produced on a lease owned by Chevron or Exxon will be sold into the North American natural gas market, though some is used to heat water in the oil field for secondary recovery or other uses. At one point Arco was turning natural gas produced on the North Slope into fertilizer because that was the only way it could be shipped anywhere, though that was back in the 80s and there is a pipeline for natural gas now.
Natural gas produced by the independents running oil and gas fields goes directly into the natural gas distribution system and the majors don't see a dime of it. The companies that have their own gas stations will buy gasoline from many sources. In most regions, there is one supplier of gasoline and most of the gas stations in the area sell gasoline from the same refinery, sometimes with slightly different additives.
For example in Oregon and Washington, most of the gasoline comes from the BP refineries in the Seattle area. Everybody but Chevron buys gasoline from BP and puts their own name on it. Chevron sells gasoline from their Richmond, CA refinery in the NW. Chevron is usually a bit more expensive in large part because of the distance it needs to travel.
BP buys the gasoline they sell from other refiners in different regions.
In any case, back to the topic, it's common that people will buy an EV then soon after start thinking about installing solar. I'm giving it some thought about the distant future, but it's more expensive here and has a slower return on investment than a lot of other areas of the country. It's expensive because demand is low and there are fewer people doing installations. When electricity is $0.08/KWh and the winters are dark with a lot of cloud cover for many weeks at a time, it isn't really worth it.
In a lot of other regions, having rooftop solar makes a lot of sense and buying an EV is a "gateway drug" that gets people thinking about it.
SageBrush
REJECT Fascism
Yep.
And it works both ways: people who start with PV then start to think about EVs.
Or they are like me: the combination of PV+EV is more attractive than the sum of the parts. This is the siren call I hear from Elon, so I presume a large group exists.
dgpcolorado
high altitude member
Yes, I put in my first PV panels in 2008 as "phase 1" of a future electric car. I live in a remote area where one has to drive a lot to get anywhere and that isn't very environmentally efficient (I bicycle commuted for 20+ years before moving to the mountains, however). The obvious solution was a sunpowered EV. My panels weren't cost-effective (too small scale, installed before prices came way down) but my rationale was that "people buy less useful toys, do they not?" They were budgeted from my "car replacement fund" as part of the cost of a new car.
Your withholding doesn't matter. What matters is what the tax tables show as your tax for the year.
Thanks! I was just reading info on this. I guess I really won't get anything from the $7500 lol how sad
Unless you pay no Federal Income Tax at all, you are eligible for at least some of the tax credit. If you pull out your tax return for last year, look to see how much federal income tax you paid for the year, not the amount you might have paid or gotten back when you filed.
swaltner
Active Member
As was mentioned, it's not the amount that you owe or get refunded when you file (line 75 or 78 on the 2015 1040 tax form). The critical line for being able to claim the full EV tax credit is your total tax (line 63 on the 2015 1040 tax form). If that is at least $7,500, you can claim the whole credit.
Personally, I wouldn't make any major changes to your tax situation on the expectation of getting a Model 3 delivery in 2017. I did a Mar 31 reservation, but doubt I'll receive mine until 2018 (and may push back on the first offer to configure since the closest Tesla Service Center is a 3 hour drive away).
Looking at total tax (line 63) on your recent 1040 tax forms, if that is not consistently at $7,500, the one thing that I would consider doing would be a Traditional IRA to Roth IRA conversion in December 2017 to artificially inflate your income for 2017. The logic being that if you were only going to be able to claim a partial tax credit for the EV purchase, by doing an IRA conversion, you get to the conversion to go through (and don't pay taxes in the future when you withdraw the money or now when you do the actual conversion. For example, if you typically had a total tax (line 63) of $5,000 in recent years, I'd convert between $7,000 and $10,000 from a Traditional IRA to a Roth IRA in the year that I made an EV purchase. This would add to your income for that year and end up and increase your total tax by $2,000 to $3,500, putting you at the point that you could claim the whole EV tax credit.
This is something you could do very late in December once you had guaranteed that you had completed the EV purchase. If you didn't have the EV purchase to absorb this extra tax liability, the tax on the conversion would need to be paid out of pocket.
cpa
Active Member
Line 63 is the wrong line. Period. Line 63 is a taxpayer's "total tax." Line 63 includes, inter alia, self employment taxes, penalties for premature distributions from qualified plans, the nanny tax, the net investment income tax, the additional Medicare tax and a couple of others. None of the additional taxes and penalties are eligible to be reduced by the plug in vehicle credit. Ever.
Rather, look at line 44. That is the key amount, because that is your income tax. Lines 48 through 53 are for various non-refundable credits to reduce one's income tax. There is an ordering sequence with these credits too, so just be very careful before making a broad assumption about how much of the $7,500 credit you will be able to use.
If your returns are simple, by all means just look at line 44. But if there is some complexity to them, you might consider hiring someone to do some tax planning just for the year that you buy your Model III.
If you look at line 56 that will take into account the other credits you are already claiming and will be a good estimate of the amount left that can be offset by the EV credit. I agree you definitely don't want to look at line 63.
FYI, was at a Tesla sales center last week and an employee there who seemed very knowledge told me they doubted anyone getting a model 3 would get the tax credit in light of recent sales volume. This was NOT in context of trying to sell me a car either. They might be wrong, but as a Tesla employee I took notice and thought I should report it here.
ricardocabesa
STD free
You should notify Fremont-seriously. That's just wrong,period.
Employees at the sales centers are no better informed than those of us here on the forums. They may be speculating based on local sales volume, rumors from other stores, or things they read online. I would take anything they say, that is not related to the vehicle itself, with a grain of salt.
deonb
Active Member
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