The credit has nothing to do with how much you owe, or will get refunded, when you file your taxes. It is a credit that reduces your entire tax liability/burden. For example you could have 100% of your income withheld, or 0% of your income withheld, and after filing your taxes the net result would be the same. (After you pay, or get your refund.)
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Tax Credit Clarification
- Thread starter SmarterMotors
- Start date
The credit has nothing to do with how much you owe, or will get refunded, when you file your taxes. It is a credit that reduces your entire tax liability/burden. For example you could have 100% of your income withheld, or 0% of your income withheld, and after filing your taxes the net result would be the same. (After you pay, or get your refund.)
brucet999
Active Member
The Federal tax credit applies against your tax liability for the tax-year of purchase, irrespective of how much you may have prepaid through withholding, estimated tax payments, previous year overpayments applied, or other credits/carry-overs. If your tax at the top of page two is $7500 or more, you get to take the credit and get a refund check for whatever your overpayment turns out to be.
If your income tax bill isn't $7500 or greater, you loose the excess, though you won't owe any federal tax that year. That's what happened to me.
If you normally don't owe that much in taxes, but there was something you wanted to do like sell some investments, the year you bought the car would be a good one to do that.
I suspect a lot of Model 3 buyers who get their car while the credit is at maximum will be disappointed they don't get the full tax credit.
The mandated 20% Fed withholding was more than $7500. last year, so I should be set for a nice refund. Thanks much for the clarification.
Thanks for the great thread and posts. Based on the spreadsheet for the delivery estimator, my order date is Apr 11th and so my delivery date is 25th September 2018, which is past the tax phase out for $7500. If I am lucky I might be eligible for $3750.
I have to make a decision on whether I like the Model 3 $3750 better than the Chevy Bolt. That's a hard, with all the intangibles.
Anyone else in the same boat?
And anyone know if such an 200K vehicle estimator exist for the Chevy Bolt?
BluestarE3
Active Member
You are still conflating tax withholding amount with tax liability amount. They are not synonymous. Look at the number on line 47 of your Form 1040.
Last edited:
dgpcolorado
high altitude member
A strategy that some of us with low incomes have used to raise taxable income to qualify for the tax credit is to convert some of a taxable IRA to a Roth IRA. The downside of doing that is that it may raise one's tax bracket, making some of the tax credit received less valuable since one wouldn't have had to pay some of those taxes anyway.
As has been discussed elsewhere, the other way to get the federal tax credit is to lease. The downside of doing that is that the way Tesla structures leases makes buying the car off-lease very disadvantageous. So, lease-to-own isn't practical. Leases also tend to have mileage limitations, with 15k miles a year the usual upper limit, although just paying the penalty for miles over the limit can make sense. Teslas are fun to drive so keeping the mileage down to 15k/year might be difficult! (For people in my state, another concern is that leasing reduces the $5000 state EV rebate by half.)
Last edited:
I think I understand. Line 47 showed $8,634 (Total Tax). Line 74 showed $9,213 (Total Payments). It should be very similar each year in the next few years.
The tax credit is by manufacturer, not car and plug in hybrids count against it. As of a few months ago Inside EVs was estimating that GM and Tesla would both hit that mark in the same quarter:
US Federal $7,500 Electric Vehicle Credit Expiry Date By Automaker
The insideEVs 12 Jan 2017 article @wdolson has just linked to says "For Tesla specifically, we estimate they will hit #200,000 in early Q2 of 2018". That's not going to happen. I have checked the numbers and in order to hit 200,000 USA in Q2 2018, Model 3 production until 31st March 2018 must not exceed 26,966 units. That doesn't look possible because Tesla is planning to do more than 4 times that amount based on the 22 Feb 2017 shareholder letter:
The same document says low volume production will start in July 2017 and volume production in September 2017. I have modeled that data. See cells E66:G66 and below here. I have used the worst case scenario. For example, Tesla said they will hit 10,000 units per week "at some point in 2018". I have used the last week of 2018. The calculations show the following Model 3 production estimates:
Q3 2017: 2,870
Q4 2017: 42,588
Q1 2018: 73,102
Total: 118,560
For the insideEVs article to be accurate, Tesla would need to produce only 26,966 Model 3's by 31st March 2018 instead of the 118,560 units they are planning to do. Doesn't seem likely. The article was written a month before the shareholder letter. That explains why it is inaccurate.
The same document says low volume production will start in July 2017 and volume production in September 2017. I have modeled that data. See cells E66:G66 and below here. I have used the worst case scenario. For example, Tesla said they will hit 10,000 units per week "at some point in 2018". I have used the last week of 2018. The calculations show the following Model 3 production estimates:
Q3 2017: 2,870
Q4 2017: 42,588
Q1 2018: 73,102
Total: 118,560
For the insideEVs article to be accurate, Tesla would need to produce only 26,966 Model 3's by 31st March 2018 instead of the 118,560 units they are planning to do. Doesn't seem likely. The article was written a month before the shareholder letter. That explains why it is inaccurate.
Last edited:
ccutrer
Active Member
Tesla's numbers are worldwide. The tax credit is based on US deliveries. IIRC, best estimates are that US is ~50% of Tesla's market.
@ccutrer, you are right. Here is the updated version:
I'm calculating 85,351 Model 3 and 251,425 Tesla deliveries in the USA by the end of Q1 USA. InsideEV's scenario assumes up to 26,966 Model 3 and less than 200,000 Tesla deliveries by the end of Q1 2018, which I find impossible.
Model 3 delivery estimates based on Tesla's Model 3 production projections in the 22 Feb 2017 shareholder letter
Q3 2017, 2,870 USA, 2,870 worldwide
Q4 2017, 34,007 USA, 42,588 worldwide
Q1 2018, 48,474 USA, 73,102 worldwide
Total = 85,351 USA, 118,560 worldwide
These are Tesla's USA deliveries without the Model 3:
Q3 2017 147,074
Q4 2017 160,034
Q1 2018 173,034
These are Tesla's USA deliveries with the Model 3:
Q3 2017 149,944
Q4 2017 189,951
Q1 2018 251,425
There is no way, USA deliveries will be less than 200,000 by the end of Q1 2018. Like I said, the article was written a month before Tesla released the Model 3 production numbers they expect to hit (5,000 units/week by the end of 2017 and 10,000 units/week at some point in 2018).
I'm calculating 85,351 Model 3 and 251,425 Tesla deliveries in the USA by the end of Q1 USA. InsideEV's scenario assumes up to 26,966 Model 3 and less than 200,000 Tesla deliveries by the end of Q1 2018, which I find impossible.
Model 3 delivery estimates based on Tesla's Model 3 production projections in the 22 Feb 2017 shareholder letter
Q3 2017, 2,870 USA, 2,870 worldwide
Q4 2017, 34,007 USA, 42,588 worldwide
Q1 2018, 48,474 USA, 73,102 worldwide
Total = 85,351 USA, 118,560 worldwide
These are Tesla's USA deliveries without the Model 3:
Q3 2017 147,074
Q4 2017 160,034
Q1 2018 173,034
These are Tesla's USA deliveries with the Model 3:
Q3 2017 149,944
Q4 2017 189,951
Q1 2018 251,425
There is no way, USA deliveries will be less than 200,000 by the end of Q1 2018. Like I said, the article was written a month before Tesla released the Model 3 production numbers they expect to hit (5,000 units/week by the end of 2017 and 10,000 units/week at some point in 2018).
shrspeedblade
Rideshare Monkey
Is it kind of wrong that I'm hoping the rollout goes OK but not great so they don't hit the 200k until Q1 2018? 
Of course, they could always start shipping a bunch of cars to Canada and Europe in December if they chose to, nice Christmas presents to our friends abroad and great New Years Presents here in 'Murica!
Of course, they could always start shipping a bunch of cars to Canada and Europe in December if they chose to, nice Christmas presents to our friends abroad
and great New Years Presents here in 'Murica!
ccutrer
Active Member
Your numbers are closer to what I expect. The good thing is tax credit wise it doesn't matter if Tesla hits 200k on Jan. 1, 2018, or March 31, 2018. The phaseout schedule is the same. Though here's to hoping if things go really well and they're about to hit it in late December 2017, they artificially delay deliveries in the US, even at the expense of Wall Street's fascination with quarterly numbers. Elon has tweeted that they'll "do the right thing".
But it does make a huge difference if it is April 1, 2018 vs. March 31, 2018.
Chopr147
Active Member
My best guess ( not reliable
)Q1 2018 is probably good, if not Q2. Elon has stated they will deliver to make best use of tax credit
shrspeedblade
Rideshare Monkey
Ain't that the truth!
It certainly is in Tesla's best interests as well, as I'm sure that many people like me will make options elections in at least some part based on the tax credit they will be receiving.
Thanks for the link and pointing out that the tax credits might expire around the same time. But the big difference is that one can buy Bolt now Vs wait for the Model 3 only to find out that the tax credits expired.
dgpcolorado
high altitude member
That may be, but the Bolt isn't a road trip car — no Supercharger network — so it depends on what one is looking for.
BluestarE3
Active Member
Unless Bolt sales really ramp up over the next year or so, I have a feeling Tesla will reach the 200K mark well before GM does.
Similar threads
