Looking at your 1040, line 47 is your tax before any credits are applied. Line 55 will sum up all your credits, including the plug-in credit. If your credits are higher than your tax then you own nothing at this point. However, it looks like I was wrong on an IRA tax penalty as that is added on line 59 which is calculated after the tax credit, so scratch that idea from my original suggestion. Line 63 will be what is owed to the government. Life 74 shows what you have already paid, so subtract the two and that will be your rebate.
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Tax Credit Clarification
- Thread starter SmarterMotors
- Start date
Looking at your 1040, line 47 is your tax before any credits are applied. Line 55 will sum up all your credits, including the plug-in credit. If your credits are higher than your tax then you own nothing at this point. However, it looks like I was wrong on an IRA tax penalty as that is added on line 59 which is calculated after the tax credit, so scratch that idea from my original suggestion. Line 63 will be what is owed to the government. Life 74 shows what you have already paid, so subtract the two and that will be your rebate.
wjhepworth
Member
I am noticing that it largely starts with one reporter who doesn't read all the details and then gets syndicated, without thought, by the others. Journalism is dead.
The 200,000 figure refers to qualifying vehicles sold after 2009. Roadsters were sold between 2008 - 2011, so roughly half of the ones sold in the US should count.
deonb
Active Member
Mmm. You're right. But it's not because of line 59 (which has to do with the 10% early withdrawal penalty). It's because of the way 15a vs. 15b works. The effect of the entire conversion goes into 15b, so it's a 0 event.
Of course you could just contribute a few pre-tax years into the IRA, then withdraw it (line 15a entry), offset the taxes due with the EV credit, and take the 10% early withdrawal penalty (line 59 entry). Depending on your tax bracket it may or may not be beneficial.
Prior to configuring and confirming your car, at which point I believe it converts to a non-refundable deposit on the purchase agreement.
Putting on more dependents would not increase your tax liability. Haha, it is kinda funny because most of us want to pay less tax, but because of these tax credit we want to pay more tax. Here are some ideas to generate more taxable income:
1. Make more money (pick up more work - i.e. drive for Uber or start a small business)
2. Sell some appreciated assets to take a capital gains tax hit. Such as stocks or real estate.
3. Convert Traditional IRA to Roth IRA and take the tax hit.
4. Claim fewer dependents, not more.
5. Certain financial aid qualifies as income.
I am sure there are plenty of other ways...
deonb
Active Member
I agree. It is crazy to read erroneous information on Forbes, LA Times, Bloomberg, Motley Fools, etc. These are reputable sites that should check facts. It makes you think twice about believing news sites.
Personally I would always claim as many dependents as I legally could since it gives me an extra income tax deduction (you are leaving money on the table if you don't). If you have a dependent, I would claim them unless someone else can claim them and benefit instead. I can only see one reason why you would not claim them (there may be more but off the top of my head, I can only envision this one right now):
• Lets say you are divorced with a 1 child. You currently claim said child as a dependent instead of your former wife. Well, maybe it might be better to let your former wife claim the child as a dependent in the year you want your taxes a little higher. It gets a little complicated because the parent with the physical custody of the child usually has the legal right to claim it, but there are waivers that can be signed to allow the other parent to claim it.
I just put that part out there as an option to increase taxes, but to me it's not a smart option. If the IRS is going to give me a deduction, I am definitely going to take it. If I needed to create more tax liability to take advantage of the full tax credit, I would probably:
• Ask my parents to buy it for me if they make more money and can benefit from the tax credit
• Make more money...take on extra gigs such as driving for Uber.
• Sell some appreciated assets and take the capital gains tax hit in an amount equal to what I need my tax liability to be (my stocks, options, and real estate).
• Convert some of the funds in my Traditional IRA into a ROTH IRA to generate some more taxable income.
• Or maybe just lease the vehicle and let the leasing company take the tax credit instead and discount your lease accordingly (state rebates/credits may not be available if leased). I have not reviewed Tesla's lease program because the Model 3 BUT according to other users here, it seems like rather than reducing the CAP COST of the Vehicle (the overall sales price), they add the tax credit to the RESIDUAL VALUE (the leasing company's opinion on the value of the car at the end of the lease).
A vehicle loses value every day that you drive it. A lease payment is basically the loss of value of the vehicle spread over the entire lease term plus interest and taxes. A simple example is a car with a $55,000.00 MSRP, purchased for $50,000.00, and depreciates to $39,000.00 in 3 years. The depreciation value is $11,000.00 and when spread over 3 years with a 3.00% interest rate and 5.00% sales tax, the monthly payment is $437.06. This is only intended as a simple example; a true calculation requires more data.
The crappy part in Tesla's scenario is that if you choose to buy the vehicle at the END of the lease, you will be paying a lot more than what it is truly worth because the buyout is usually the depreciated value of the car (which is higher because they added the tax credit to it rather than just discounting the sales price/cap cost).
I think the leasing company should be reducing CAP COST with the Tax Credit instead. However, the monthly payments either way is about the same (give or take a few bucks each month); it's just if you decide to buy it at the end, it will cost you a lot more. Also, does anyone know if Tesla allows a Multiple Security Deposit (MSD) program to reduce interest???
I built a little lease calculator if someone has all the figures to calculate what goes into a Tesla lease. You can enter the info and breakdown where every penny of the lease payment is being applied to (you can also play around with the numbers to see how it would differ if the tax credit was applied to the Residual Value instead of reducing Cap Cost):
Lease Calculator:
Smarter Motors
Last edited:
...Runs out and looks in his car...
You are absolutely correct! I didn't know that 12 V port was there, but it's definitely there in mine also. It's not really very visible when sitting in either of the front seats so I guess I just never noticed it. Thanks for letting me know!
SageBrush
REJECT Fascism
A petition to the White House requests that the EV tax credit cap be extended beyond the current 200,000 vehicles per manufacturer.
Link to the petition: Increase the EV tax credit cap per manufacturer. | We the People: Your Voice in Our Government
I signed it as #1992.
A petition to the White House asking Tesla to be allowed to sell directly in all states was launched in June 2013. We learned about it on this message board two weeks after it commenced when it had less than a thousand signatures. TMC members began signing and telling their friends. The goal of 100,000 signatures was reached within the required 30 days. The White House responded in July 2014
Link to 2014 response: Response to We the People Petition on Tesla Motors | We the People: Your Voice in Our Government
I encourage all TMC members to sign the current petition and spread the word.
ucmndd
Well-Known Member
Better yet, focus your efforts on your congress critters, as they are the only ones that can do anything to change reality in this scenario. A token pat on the head from the white house that says "we support you, but congress makes laws" accomplishes nothing.
There's also a possibility of an adult child under 24, who's a full-time student who'd be a qualifying child but who would gain from the exemption. Typically, in that position the parent would have a higher marginal tax rate so would be better off claiming the child, but it's conceivable that other credits and deductions would make it such that the child would be better off claiming themselves.
JBare
Member
AZ Desert Driver
Rare combination
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