I just saw my tax return and form 8834 & 8936 tax credit forms clearly displays the max credit is $2,500? Any idea why Tesla is promoting $7,500?
One of the exceptions is the person with lots of wealth, but not lots of taxable income (e.g., invested in tax-exempt securities).
I believe Elon's paycheck from Tesla is under 50k... stock options on the other hand...
I'm not sure the old rules of thumb are going to apply to Tesla.
Does anyone know if the 200,000 limit for each manufacturer before the credits start phasing out is the total cars from the manufacturer or the number for each type (e.g., Roadster vs. Model S)? Unfortunately I'm inclined to interpret the former when reading the tax code online because it would be a shame for the Roadster purchases to count against the total for those of us waiting to buy our Model S.
Jeffrey, since Tesla is only at 14,000 cars so far (< 17,000 with Roadsters included), I think you're ok!
It's per model, not manufacturer. Otherwise, the Nissan Leaf wouldn't qualify.
@M & C,
The credit is for EVs. Nissan has produced a relatively small fraction of 200k EVs so far.
Good point. I checked the IRS website which didn't clarify the original question one bit but did find this:
"The credit for vehicles with at least four wheels is subject to a phaseout (reduction) once the vehicle manufacturer (or, for a foreign manufacturer, its U.S. distributor) sells 200,000 of these vehicles to a retailer for use in the United States after 2009."
Lol :) Since Tesla doesn't sell to a retailer, does this mean the credit will never phaseout?
And how steep is the phaseout? Instant, or gradual?
The phaseout is gradual. Here's what the IRS has to say on a different page w/slightly different wording:
"Qualified Plug-In Electric Drive Motor Vehicle Credit (IRC 30D) Phase Out
The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period."
This makes it sound like the credit is by manufacturer, not vehicle model. They also have a link to "Quarterly Sales by Manufacturer" that includes cumulative sales to date. The table lists Ford & Nissan sales, but no Tesla info????
Ford 9,207 (includes 2012, 2013 Ford Focus Electric, 2013 Ford Fusion Energi, 2013 C-MAX Energi)
Nissan 16,803 (includes 2011, 2012 Nissan Leaf)
No matter how you count the beans, it's going to be a while before a phaseout begins for a Tesla vehicle.
Elon has suggested the credits will be used up by the time the GenIII comes out. Total S & X sales over the next ~4 years =>200K.
Anyone know if the credit is reduced by AMT? I've lost kiddie credits and all kinds of other deductions due to the AMT...
In the same host, AMT-wise. Seeing as it is a credit and not a deduction, I would think its AMT-proof (disclaimer: not a tax expert).
Me neither, but I think the AMT determines the tax you pay (not owe) - then you deduct the $7500
It's not reduced by the AMT.
Not subject to AMT. Full $7,500 in any case for 2013 tax year. Just add $7,500 in line 4 of form http://www.irs.gov/pub/irs-pdf/f8936.pdf
per instructions on page 3 of from 8935.
Prove for Tesla: http://www.irs.gov/Businesses/30D.-New-Qualified-Plug-in-Electric-Drive-....
Anybody know If I can take a credit on my 2013 taxes for a vehicle that I didn't take delivery on until the 1st week of January, 2014? I put down the deposit in 2013 -- does that count? :-)
Or, if not, how about a credit on my first 2014 estimated tax payment?
The sale takes place of date of the paperwork which transfers ownership. This starts your vehicle licensing fee obligation, along with liability and determination of tax year. Tesla would be unlikely to date the contract before delivery since this could leave them open to accusations of improper accounting.
"Or, if not, how about a [$7,500] credit on my first 2014 estimated tax payment?"
Your estimated tax payments can not be backloaded as you must pay equally throughout the year. That is unless you are overpaying. If I were to deduct the credit from my payments, I would take 1/4 at a time from each of my quarterly payments.
ChopinBlues: As you will see the tax form will ask for placement of service date for the vehicle (Line 3). Based on that, and if you don't have a 2013 date for that, I would be very surprised if you could make a deduction for tax year 13. On your other question, if you are employed you can increase the number of dependends and thereby reduce your witholdings during 2014 to compensate for the expected tax credit from your Tesla. However, have this calculated by a tax professional as you have to be careful not to underpay wihtholdings as this may lead to penalties.
Unless the IRS specifically states you can do something, I wouldn't do it. Even then, as we all know the tax man changeth thy mind as thy wind blows.
@Big T, that is incorrect. I am an inactive CPA, but still versed in taxes. A taxpayer is allowed to pay estimated taxes throughout the year by quarter based on the specific income and allowable expenses for that particular quarter. The estimated payments do not have to be evenly spread. For example, if you get a bonus in December that is 80% of your income for the year, you can pay 80% of your estimated tax due for the year by January 15, and be just fine. Same deal for recognizing a tax credit for a car purchased early in the year.
Your tax preparer will need to include Form 2210, Underpayment of Estimated Tax by Individuals. On that form there is an option to distribute taxable income by quarter earned, and prove that the uneven estimated taxes were paid when due. Like so much else in the tax code it is a complicated form and costs money to prepare, but the option is there.
I think what's confusing about Form 8936 is that line 15 says to enter the credit on that line AND on line 18, even though Line 18 has nothing to do with four wheel cars. So yes, if you follow the IRS instructions in order, and ignore what the instructions for Line 18 say, then I suppose this is easy and straightforward. Anyway, as has been stated before, if you do the form correctly, you will have $7500 in Line 15, 18 and 19 (and probably 23).
My form 8936 has been done correctly - by a CPA and I had another review it. 15, 18, 19, and 23 are all the same - $1,350.
Silly question here maybe,
If I purchased the car and got the 7,500 tax credit, would I get that money back when I file my taxes?
I am planning on using that 7,500 as part of my down payment, so if we don't get that back directly that changes my plans.. Does income bracket and selection of 60 or 85 type depended on the 7,500?
You can only claim the tax credit when you file you taxes in the next year when you file your taxes. I pay quarterlies so I just deducted $1750 from each of my quarterlies I was going to pay. As long as you owe more than $7500 in taxes you will get it back. Not sure there are too many people buying Teslas that don't owe more than $7500 in taxes
Jman it is a credit on 2014 taxes. Whether you get a refund depends on how much you already paid. You could reduce withholding for the rest of the year for example by about $1000/month.
Did my taxes yesterday and got 7500 credit
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