Tax discussion, strategies and questions

[mongo]

I was talking about those who qualify, which will be the vast majority of buyers. If you do qualify then you are getting a $7500 interest-free loan.

If you qualify, you are getting (assuming fully qualifying car) a $7,500 gift. As in $7,500 you do not have to pay ever.

One could view their tax payments as repaying it, but the base situation is that those tax payments exist regardless so the situations are:

Without Clean Vehicle Credit:
Pay X in taxes, buy car, pay Y for car. Net outflow: X+Y
With in 2023:
Buy car, pay Y for car, pay greater of zero or X-$7,500 in taxes. Net outflow: somewhere between Y and (Y + X - $7,500 )
With in 2024
Pay X in taxes, buy car, pay (Y-$7,500) for car. Net outflow X+Y-$7,500

So you end up $7,500 to the positive (assuming you would have bought a car anyway)

 

[SunnylandY]

We could ask the question whether people who don't have $7,500 in tax liability have any business buying a new car in the first place, Tesla EV or otherwise.

 

[Snerruc]

We could ask the question whether people who don't have $7,500 in tax liability have any business buying a new car in the first place, Tesla EV or otherwise.

Well, some people are very tax efficient. My income is in six figures yet my tax bill is usually less than $5000. I’m on my second S.

 

[mongo]

We could ask the question whether people who don't have $7,500 in tax liability have any business buying a new car in the first place, Tesla EV or otherwise.

You could, but @wipster may tell you off (nicely, of course).
$7,500 in tax for married no dependants requires $92k in gross W-2 income. Two kids pushes it to $122k. Self employed persons can deduct health insurance premiums.
Those with a paid off house or low mortgages (2008 purchase) have low monthly expenses.
Retired peeps (Roth) or social security recipients have lower taxes also.
Some people only work to cover expenses.

With the time of sale credit transfer, even those in lower taxable income situations have the opportunity to obtain low TCO transportation. Model 3 @ $550 a month (tax, $7.5k credit, and charge connector included, no fuel savings adjustment) is $6,600 a year, 9% of net ($73.5k if W-2) at the $92k gross level. Guidance is a car payment less than 10-15% of take home pay.

 

[GSP]

Well, some people are very tax efficient. My income is in six figures yet my tax bill is usually less than $5000. I’m on my second S.

I wonder how to do that. Even if your only source of income was capital gains, there still is a 20% income tax. $100,000 of such income would result in $20,000 tax liability. Perhaps there is a way to itemize deductions to get to less than $5000 tax?

GSP

 

[traxila]

I wonder how to do that. Even if your only source of income was capital gains, there still is a 20% income tax. $100,000 of such income would result in $20,000 tax liability. Perhaps there is a way to itemize deductions to get to less than $5000 tax?

GSP

Tax exempt bonds.

 

[Knightshade]

I was talking about those who qualify, which will be the vast majority of buyers. If you do qualify then you are getting a $7500 interest-free loan.

How is money you never have to repay any sort of loan?

I wonder how to do that. Even if your only source of income was capital gains, there still is a 20% income tax. $100,000 of such income would result in $20,000 tax liability. Perhaps there is a way to itemize deductions to get to less than $5000 tax?

GSP

First- cap gains is only 15% on long term unless it's considerably more than 100k.

Second, even without itemizing the 2023 standard deduction is $13,850 for single filers and those married filing separately, $27,700 for those married filing jointly, and $20,800 for heads of household.

Third, you can roll over previous-year cap losses to offset this years gains.

Forth- there's various non-taxable income sources

Plenty of other possibilities but those are a few things off top of my head to consider.

 

[Sudre]

I wonder how to do that. Even if your only source of income was capital gains, there still is a 20% income tax. $100,000 of such income would result in $20,000 tax liability. Perhaps there is a way to itemize deductions to get to less than $5000 tax?

GSP

I'll help a bit on this one too... simply Google. Married filling jointly double the bracket.... sort of. just Google it.

Then add (actually subtract..lol) the simple deductions as mentioned above.

 

[Nrkl]

I wonder how to do that. Even if your only source of income was capital gains, there still is a 20% income tax. $100,000 of such income would result in $20,000 tax liability. Perhaps there is a way to itemize deductions to get to less than $5000 tax?

GSP

My understanding is that long term capital gains are taxed at 0% up to $80+k for married filing jointly. And 15% after that unless your gains are high. So you can get quite a bit over $100k of long term cap gains as a joint filer before you even get to $5k

 

[Blue horseshoe]

My understanding is that long term capital gains are taxed at 0% up to $80+k for married filing jointly. And 15% after that unless your gains are high. So you can get quite a bit over $100k of long term cap gains as a joint filer before you even get to $5k

Only if you have no other income. Generally speaking most people will be taxed 15% up to about 500k in gains and 20% for everything above that. And this is just federal. Depending on which state you reside in they'll be expecting their cut

 

[stealthyc]

Only if you have no other income. Generally speaking most people will be taxed 15% up to about 500k in gains and 20% for everything above that. And this is just federal. Depending on which state you reside in they'll be expecting their cut

There is an additional 3.8% that can be tacked on at high income as well (Net Investment Income Tax)

 

[Nrkl]

Only if you have no other income. Generally speaking most people will be taxed 15% up to about 500k in gains and 20% for everything above that. And this is just federal. Depending on which state you reside in they'll be expecting their cut

Right,

Only if you have no other income. Generally speaking most people will be taxed 15% up to about 500k in gains and 20% for everything above that. And this is just federal. Depending on which state you reside in they'll be expecting their cut

Yes it’s not that straightforward, but point being that the US is very lightly taxed if you only have long term capital gains income.