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Tax credit quest

Discussion in 'Model S: Ordering, Production, Delivery' started by Rawad H., Apr 8, 2014.

  1. Rawad H.

    Rawad H. Member

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    Location:
    Livonia mi
    Hello everyone


    I'm new to the tesla world and in the early stages of deciding and ordering my tesla s. I'm sorry if this is in the wrong section but here is my question. I have been confused about if I would get an actual tax refund check of 7,500$ when tax season rolls around so I called my tax consultant and here is what he told me


    Example


    Income: $100,000 a year
    Taxes paid : $20,000 a year
    What the non refundable tax credit will do is change my total Income to $92,500 and in turn reduce the amount I owe the IRS to $18,500 so a refund of only $1,500 which is proportionate to what my income was reduced to. Any help or comments would be appreciated and thx!
     
  2. ElSupreme

    ElSupreme Model S 03182

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    It doesn't work like that. That is the description of a deduction. The EV $7,500 is a credit all of which goes to your bottom line.

    If you owe (either already paid, or yet to pay) more than $7500 in federal taxes over the year, you will get the full $7,500.
     
  3. Rawad H.

    Rawad H. Member

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    That's what I was thinking what he described was more of a deduction then a credit so if I have paid $20k over the year I should get the full $7500 back as a refund. He would not listen to me and kept seeing it does not work like that, I'm thinking of working with someone else because it does not seem like he knows what he is doing.
     
  4. rsampsonjr

    rsampsonjr Member

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    Yes, you should go with someone else to do your taxes. My CPA correctly listed it as a credit on 2013 taxes.
     
  5. swaltner

    swaltner Member

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    Let the person know they should read the directions for IRS Form 8936 and tell them that their inability to understand these instructions is why you are picking someone else to file your taxes.
     
  6. Rawad H.

    Rawad H. Member

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    thanks guys i appreciate it, i have been on the fence with him for the last 2 years and i will def be making the switch.
     
  7. Gizmotoy

    Gizmotoy Active Member

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    Form 8936 is a little weird. It's easy to end up with $2500 instead of $7500 if you just work your way down the form instead of following the accompanying instructions.

    That said, there should be no confusion whatsoever between credit/deduction. That part is very clear.
     
  8. AndyM

    AndyM Member

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    Sherwood, OR, USA
    I agree with the others. Even Turbo Tax gets this right. this is a credit against your tax burden, not a deduction to your income.
    Time to change your tax consultant.
     
  9. hughconn

    hughconn Member

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    Got my taxes back today and the full $7,500 credit plus credit for installation of charging unit. Musky and I thank you Uncle Sam!
     
  10. astrosgp

    astrosgp Member

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    Don't forget, you may be able to also take the sales tax paid as a deduction, which can amount to several thousand dollars, as well. If you itemize on Schedule A and take the deduction for state sales tax as opposed to state income tax, you can add the sales tax paid for the car to the default "Table Amount" that is based on your income.
     
  11. hughconn

    hughconn Member

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    Check that. AMT ate my credit for charger installation...
     
  12. CalDreamin

    CalDreamin Member

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    Yep, me too. $1200 for HPWC + $338 to install it. Zero tax credit because of AMT.

    At least the $7500 tax credit for the Model S purchase survived AMT.
     
  13. GoBlue88

    GoBlue88 Member

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    #13 GoBlue88, Jan 4, 2015
    Last edited: Jan 4, 2015
    Reviving this thread because it is that time of year for those of us who purchased in 2014.

    Agreed that the form is a little weird/confusing. Link to the form and instructions is here: http://www.irs.gov/pub/irs-pdf/f8936.pdf . Line 18 is where the confusion is because it says it is for 2- and 3-wheeled vehicles only. You basically have to ignore the line 18 instruction and follow the line 15 instruction where it says "if the vehicle has at least 4 wheels, leave lines 16 and 17 blank and enter this amount on line 18".

    Here's what I did:

    Lines 1-3: entered vehicle information
    Line 4: entered $7500
    Skipped Part II (lines 5-14) since I don't use the car for business/investment purposes
    Line 15: entered $7500
    Line 16: left blank
    Line 17: left blank
    Line 18: entered $7500 per the instruction on line 15
    Line 19: entered $7500
    Line 20: This will be where you enter the total tax before credits from your 1040, which will hopefully be > 7500. For kicks I just entered $10,000
    Line 21: Will only have nominal credits most likely, so entered $0
    Line 22: Entered $10,000
    Line 23: Entered $7,500. This is the credit that gets transferred back to 1040, line 54.

    Not too difficult - but I can see that if an accountant doesn't carefully read the line 15 instruction, he could arrive at $2,500 as specified in line 17.
     

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