US$7500 tax rebate on new electric/alternative vehicle purchases

S-2000 Roadster · Jun 18, 2011

How does this $7,500 tax credit work? Does your car dealer file some kind of paperwork that makes this automatic? Do you have to find the right form yourself and remember to file it at the right time in order to get the check or credit? Just when and where is all of this handled?

I've heard that you get the credit even if you end up owing $0 in federal taxes, is that true? If so, I imagine that you have to cross your 't's and dot your 'i's for that kind of money.

Apologies to non-U.S. taxpayers who probably don't care about this topic.

user497 · Jun 18, 2011

With the caveat that I am not a tax attorney and that nothing I tell you can be held against me, here goes: when I did my taxes in 2010 I had to file a 8936 form to request the $7,500 deductible. I believe I also sent a copy of the sales receipt. I read somewhere that there was around $30 million in EV rebate fraud last year but so far I haven't been audited

Other than giving you the receipt the dealer is not involved. Since it is a credit I think you would probably end up with a refund if you owed less than $7,500.

ahimberg · Jun 18, 2011

You do need to have had income to require >7500 in federal taxes for the year, if you have a zero or low income year you won't get a refund.

strider · Jun 18, 2011

ahimberg said:
You do need to have had income to require >7500 in federal taxes for the year, if you have a zero or low income year you won't get a refund.

I think it's fairly safe to say that anyone buying a $110k+ car itemizes their taxes

But to the OP, I just told my accountant (he then wanted to go outside to look at it) - he looked the model up in an IRS table (the credit is based on battery pack size) and filled out a form to claim the rebate.

S-2000 Roadster · Jun 19, 2011

ahimberg said:
You do need to have had income to require >7500 in federal taxes for the year, if you have a zero or low income year you won't get a refund.

I was told that you would get $7,500 even if you had no income and no federal taxes due. Then again, I've heard more conflicting information about electric vehicles than about any other subject so far this year.

Sparrow · Jun 19, 2011

I am almost certain the EV tax credit works the same way as the EVSE Tax credit works. You have to use the credit for the tax year you buy the car or charger and your tax credit is limited to the amount of tax you owe for that year. In my case, I could not use the EVSE tax credit for 2010 after purchasing my charger, because I did not have any federal tax liability for 2010.

Mycroft · Jun 19, 2011

strider said:
I think it's fairly safe to say that anyone buying a $110k+ car itemizes their taxes

Since my house is paid off, I can't itemize. So that's a YMMV issue.

That said, I don't think you need to itemize to take advantage of the credit. It goes on line 53 of the 1040.

strider · Jun 19, 2011

Mycroft said:
Since my house is paid off, I can't itemize. So that's a YMMV issue.

That said, I don't think you need to itemize to take advantage of the credit. It goes on line 53 of the 1040.

You're right. I just made the assumption that someone able to buy a Roadster would have property tax and/or state income tax payments that would cause them to itemize.

daniel · Jun 19, 2011

S-2000 Roadster said:
I was told that you would get $7,500 even if you had no income and no federal taxes due. Then again, I've heard more conflicting information about electric vehicles than about any other subject so far this year.

I am not an attorney or a tax expert, but this is what I've read and been told: A tax credit means it's a credit against your taxes. This means you subtract it from your total income tax. This particular tax credit is "non-refundable," meaning that if your total tax for the year is less than $7,500 then you pay zero tax, but your tax amount does not go negative and you cannot roll it over to the next year. There are tax credits that can be applied to future years, but this is not one of them.

My salesman told me that Tesla will give me a proof of purchase form that I (or my tax preparer) will attach to my 1040.

strider · Jun 19, 2011

Daniel is correct. That's why there was some discussion by the Obama Admin of the current credit being converted to a rebate (like the $5k from California - they mail you a check) - there's a thread on that topic somewhere on TMC.

But at the expense of possibly taking this thread completely off the rails, how the heck can someone afford to buy a Roadster and pay less than $7,500 in Federal taxes?

roblab · Jun 19, 2011

strider said:
But at the expense of possibly taking this thread completely off the rails, how the heck can someone afford to buy a Roadster and pay less than $7,500 in Federal taxes?

Ahh, that's why the accountants get the big buck$.

Sparrow · Jun 19, 2011

I didn't owe any federal taxes, because I'm retired and live off of investments, which of course didn't do so well a couple of years ago.

TEG · Jun 19, 2011

Yes, my understanding is that it only works if you have federal tax liability, and if you have less than $7500 of liability you won't get the full credit.
Apparently it isn't reduced by AMT, which caused some other credits, such as the old hybrid credits, to be less valuable to some.
Also, yes, there is some effort underway to convert it to a direct time-of-purchase credit in future to make it less hassle, less delayed, and available to all.

Now, some car dealers have found a way to make the credit instant - they lease the car to you, the dealer (or finance company) claims the credit, then you pay off the lease soon after-wards.

S-2000 Roadster · Jun 20, 2011

strider said:
But at the expense of possibly taking this thread completely off the rails, how the heck can someone afford to buy a Roadster and pay less than $7,500 in Federal taxes?

No home, no state income tax, and a 7-year car loan - my first car loan ever. Also, a very motivated bank. Think outside the box, man!

I'm not pointing fingers, but this country seems to be full of assumptions that anyone who can afford the trappings of the rich is evil, filthy rich and can therefore afford anything (including paying the way for everyone else). I paid $3,000 per year for my second vehicle license because this state saw fit to tax based on sales price (high because of a hand-made American vehicle) instead of something more sane like emissions, miles, or weight. But the truth is that not everyone falls into the same cookie cutter roles or situations as might be expected. I saw people save up for years just to afford a used Hummer H1 - but they had fun once they finally pulled it together!

He who dies with the most toys, Wins!

tennis_trs · Jun 20, 2011

TEG said:
...
Apparently it isn't reduced by AMT, which caused some other credits, such as the old hybrid credits, to be less valuable to some.
...

That's correct, at least it was for tax year 2009 (I don't think it's changed), and it is a very important point.

smorgasbord · Nov 21, 2011

On a related note: Did anyone file Form 8911 – Alternative Fuel Vehicle Refueling Property Credit for 2010 for a UMC installation?

I didn't install an HPC, but I did put in an RV outlet and purchased the UMC, and am assuming both are deductible. I know you're probably not an accountant, but I'd like to hear from anyone who did this last year, as I expect to do it this year. I noted that on the form, there is a calculation for minimum tax - did that play a factor in anyone's ability to claim the credit?

Kipernicus · Nov 22, 2011

Interesting, smorgasbord. What if the UMC 2.0 is included with the Model S? Will this still work if we get a quote on the value of the included UMC?

islandbayy · Jul 1, 2013

You'd be surprised

Cash is king =]

deonb · Jul 1, 2013

So from Form 8936 it looks like you can claim an unlimited number of $7'500 EV tax credits in the same year.
"Use a separate column for each vehicle. If you need more columns, use additional Forms 8936 and include the totals on lines 7 and 11."

Is there any per-person restrictions regarding household credits (Married filing Jointly) in any other way or form?

i.e. If I buy a Leaf next year (or this year) and a Model X the year after, then a Gen III in 2017, assuming that Tesla & Nissan are still within their respective 200'000 vehicle limits, is there anything else that will stand in the way on getting the credit on all of them?

Or do you need to do something like buy all qualifying EV's within the same year?

ChadS · Jul 1, 2013

I don't work for the IRS (and theirs is the only opinion that matters), but my understanding is that there are no personal limitations. If you have the tax liability, and you buy the cars from automakers still eligible, you can take as many credits as you like. I have known people that took more than one in a year.

Of course, taking a lot of them may increase your chances of an audit...

US$7500 tax rebate on new electric/alternative vehicle purchases

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