2024 EV tax POS tax credit no tax liability required

[Electroma]

Where do you see that? That seems to be opposite of IRS guidance:

​

Q4: What if a buyer has insufficient tax liability to fully use a transferred credit? (added October 6, 2023)​

​

A4. The amount of the credit that the electing taxpayer elects to transfer to the eligible entity may exceed the electing taxpayer's regular tax liability for the taxable year in which the sale occurs, and the excess, if any, is not subject to recapture from the dealer or the buyer.​

That pretty much settles it

 

[mongo]

The new rules just allow a transfer of the credit. You still need to be eligible with tax liability. This whole thing about POS is just a change of who is the one applying for it at purchase time. The buyer still needs to file it during normal tax time.

IRS guidance and (g) indicate your tax liability does not limit your credit when transfered.

For the purchase year. You are attesting by signing a form at the dealer saying that your estimated “purchase year” income is eligible under the same income thresholds. If you happen to not be eligible by the end of the purchase year, or your tax liability isn’t covered by the credit, you will owe the IRS the credit amount at tax time. And, maybe they could disqualify your for future EV credits for making a false claim at purchase time. I know they have been known to do so when someone makes a false claim for other tax credits such as the child care credit, education credit, etc.

If you’re on the border, I would suggest just waiting to file for the credit during tax time as traditionally done up to now.

Lower of the two years, the law:
(A) In general. No credit shall be allowed under subsection (a) for any taxable year if --
(i) the lesser of --
(I) the modified adjusted gross income of the taxpayer for such taxable year, or
(II) the modified adjusted gross income of the taxpayer for the preceding taxable year, exceeds
(ii) the threshold amount.

Guidance:
An attestation, that either:
Your prior year modified AGI did not exceed the modified AGI limitation, or, if not known, to the best of your knowledge and belief, your prior year modified AGI did not exceed such limitation, or
To the best of your knowledge and belief, your current year modified AGI will not exceed the modified AGI limitation. See Topic B FAQ 1 and Topic E FAQ 1.

An attestation that in the event you exceed the applicable modified AGI limitations, you will repay the amount received as an addition to tax for the tax year the vehicle was placed in service

 

[TespaceX]

IRS guidance and (g) indicate your tax liability does not limit your credit when transfered.

That makes no sense. Then anyone can just transfer the credit to the dealer and “make” money. Why wait until tax time and get less credit?

 

[mathnerd88]

Why don’t I just keep buying a million Tesla Model Y’s, claim tax credit for the full $7500 off the price, and then immediately sell them back to CarMax/Carvana?

Sounds like a recipe for fraud, and frankly, easy money making.

 

[CWhite]

Why don’t I just keep buying a million Tesla Model Y’s, claim tax credit for the full $7500 off the price, and then immediately sell them back to CarMax/Carvana?

Sounds like a recipe for fraud, and frankly, easy money making.

Well there is this verbiage in the IRS documents:

To qualify, you must:

• Buy it for your own use, not for resale
• Use it primarily in the U.S.

 

[mathnerd88]

Well there is this verbiage in the IRS documents:

To qualify, you must:

• Buy it for your own use, not for resale
• Use it primarily in the U.S.

Yeah, it would be really hard to prove that I didn’t buy it for resale if I used the car for a month and then sell it because I don’t need it or I didn’t like the vehicle. I could get the model Y first, hate it, then get the Model 3, or then decide I want a performance one later.

Either way, most EVs don’t qualify for the full tax credit anyhow unless they’re a lease.

 

[Big Dog]

So it wouldn't matter if the Government didn't take out enough withholdings? You would get the tax credit and you wouldn't owe the Government the difference? So if I made 50K a year and didn't pay enough in Federal Taxes it wouldn't matter?

Witholdings never mattered. What was important was your tax liability for the year.

 

[mongo]

That makes no sense. Then anyone can just transfer the credit to the dealer and “make” money. Why wait until tax time and get less credit?

Yes, they can (income permitting). No reason to not utilize the transfer option.

 

[mongo]

Witholdings never mattered. What was important was your tax liability for the year.

It does in a practical sense if the government said you had to cover the difference between the transfered credit and your liability. In that situation, you would need to pay (credit - withholding). Which could theoretically still be a refund.

 

[mongo]

Why don’t I just keep buying a million Tesla Model Y’s, claim tax credit for the full $7500 off the price, and then immediately sell them back to CarMax/Carvana?

Sounds like a recipe for fraud, and frankly, easy money making.

There is a limit of two transfer credits per taxpayer per year. Only people than don't qualify would be interested in the marked up resale price.

Yeah, it would be really hard to prove that I didn’t buy it for resale if I used the car for a month and then sell it because I don’t need it or I didn’t like the vehicle. I could get the model Y first, hate it, then get the Model 3, or then decide I want a performance one later.

Either way, most EVs don’t qualify for the full tax credit anyhow unless they’re a lease.

The IRS guidance is a 30 day holding period. Tesla though has reportedly denied new orders from people with a history of reselling.

 

[HitchHiker71]

Where do you see that? That seems to be opposite of IRS guidance:

​

Q4: What if a buyer has insufficient tax liability to fully use a transferred credit? (added October 6, 2023)​

​

A4. The amount of the credit that the electing taxpayer elects to transfer to the eligible entity may exceed the electing taxpayer's regular tax liability for the taxable year in which the sale occurs, and the excess, if any, is not subject to recapture from the dealer or the buyer.​

I suspect this guidance will change between now and year end - because if there's no recapture of the credit due to insufficient tax liability - this is not a tax credit by definition - it is a tax rebate - which is an altogether different tax scheme.

 

[NJturtlePower]

Yeah, it would be really hard to prove that I didn’t buy it for resale if I used the car for a month and then sell it because I don’t need it or I didn’t like the vehicle. I could get the model Y first, hate it, then get the Model 3, or then decide I want a performance one later.

Either way, most EVs don’t qualify for the full tax credit anyhow unless they’re a lease.

Huh? Most Tesla's currently DO qualify for the full $7500 except the Model S since its a sedan over $55k!

Has nothing to do with leasing or buying under the current EV bill is all about where they are made and where the battery components come from.

 

[mongo]

I suspect this guidance will change between now and year end - because if there's no recapture of the credit due to insufficient tax liability - this is not a tax credit by definition - it is a tax rebate - which is an altogether different tax scheme.

Tax credits can be refundable or non-refundable, they are still credits

Title 31 1324:

(b) Disbursements may be made from the appropriation made by this section only for—
(1) refunds to the limit of liability of an individual tax account; and
(2) refunds due from credit provisions of the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.) enacted before January 1, 1978, or enacted by the Taxpayer Relief Act of 1997, or from section 21, 24, 25A, 35, 36, 36A,[1] 36B, 168(k)(4)(F), 53(e),[1] 54B(h),[1] 3131, 3132, 3134, 6428, 6428A, 6428B, 6431,[1] or 7527A of such Code, or due under section 3081(b)(2) of the Housing Assistance Tax Act of 2008.

 

[mongo]

Huh? Most Tesla's currently DO qualify for the full $7500 except the Model S since its a sedan over $55k!

View attachment 981111

Has nothing to do with leasing or buying under the current EV bill is all about where they are made and where the battery components come from.

They said EVs, not Teslas
Tesla has domestic and Japanese cell sourcing sufficient to allow all MSRP eligible models to qualify (for 2023).

Leasing is a different credit which lacks most of the restrictions.

 

[NJturtlePower]

They said EVs, not Teslas
Tesla has domestic and Japanese cell sourcing sufficient to allow all MSRP eligible models to qualify (for 2023).

Leasing is a different credit which lacks most of the restrictions.

Well since Tesla is the majority of EV's sold and you know this is a Tesla forum.....

Yes, leasing is different and in the end the EV bill means nothing really as you see with Lucid and Polestar who don't qualify offering $7500+ cap. cost reductions currently to try to move inventory. That's always an option for any vehicle, ICE or EV when they are desperate enough.

 

[HitchHiker71]

Tax credits can be refundable or non-refundable, they are still credits

Title 31 1324:

(b) Disbursements may be made from the appropriation made by this section only for—
(1) refunds to the limit of liability of an individual tax account; and
(2) refunds due from credit provisions of the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.) enacted before January 1, 1978, or enacted by the Taxpayer Relief Act of 1997, or from section 21, 24, 25A, 35, 36, 36A,[1] 36B, 168(k)(4)(F), 53(e),[1] 54B(h),[1] 3131, 3132, 3134, 6428, 6428A, 6428B, 6431,[1] or 7527A of such Code, or due under section 3081(b)(2) of the Housing Assistance Tax Act of 2008.

View attachment 981115

Emphasis on the last highlighted sentence in teh graphic below from the IRS website - what has been published is NOT final guidance/rules - final rules are still forthcoming per below. I suspect when the final rules are published - non-refundable personal credits will not survive. Most Americans are not keen on the $7500 credits already, and even more Americans will not be keen on providing direct non-refundable credits to EV buyers. Just my two cents of course.

 

[mongo]

Emphasis on the last highlighted sentence in teh graphic below from the IRS website - what has been published is NOT final guidance/rules - final rules are still forthcoming per below. I suspect when the final rules are published - non-refundable personal credits will not survive. Most Americans are not keen on the $7500 credits already, and even more Americans will not be keen on providing direct non-refundable credits to EV buyers. Just my two cents of course.

View attachment 981136

Note! The transfer is NOT a personal credit!

(g)(6) Application of certain other requirements. In the case of any election under paragraph (1) with respect to any vehicle --
(A) the requirements of paragraphs (1) and (2) of subsection (f) shall apply to the taxpayer who acquired the vehicle in the same manner as if the credit determined under this section with respect to such vehicle were allowed to such taxpayer,

Regardless of this not being the finalized guidance, refundable is directly called out in the legislation under (g)(7)(C). So the IRS would be acting against Congress to make it otherwise.

(7) Advance payment to registered dealers.
(A) In general. The Secretary shall establish a program to make advance payments to any eligible entity in an amount equal to the cumulative amount of the credits allowed under subsection (a) with respect to any vehicles sold by such entity for which an election described in paragraph (1) has been made.
(B) Excessive payments. Rules similar to the rules of section 6417(d)(6) shall apply for purposes of this paragraph.
(C) Treatment of advance payments. For purposes of section 1324 of title 31, United States Code, the payments under subparagraph (A) shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.

 

[SpicyPaneer]

It’s confusing POS! 22/23 rule is better in my opinion. Can you image they tell you afterwards you don’t qualify and she out $7500.

 

[mongo]

It’s confusing POS! 22/23 rule is better in my opinion. Can you image they tell you afterwards you don’t qualify and she out $7500.

The only reason they would tell you that you don't qualify under the point of sale transfer method is if your income was too high in both the year of purchase and the previous year.

(10) Recapture. In the case of any taxpayer who has made an election described in paragraph (1) with respect to a new clean vehicle and received a payment described in paragraph (2)(C) from an eligible entity, if the credit under subsection (a) would otherwise (but for this subsection) not be allowable to such taxpayer pursuant to the application of subsection (f)(10), the tax imposed on such taxpayer under this chapter for the taxable year in which such vehicle was placed in service shall be increased by the amount of the payment received by such taxpayer.

(f)(10) Limitation based on modified adjusted gross income.
(A) In general. No credit shall be allowed under subsection (a) for any taxable year if --

(i) the lesser of --​

(I) the modified adjusted gross income of the taxpayer for such taxable year, or​

(II) the modified adjusted gross income of the taxpayer for the preceding taxable year, exceeds​

(ii) the threshold amount.​

(B) Threshold amount. For purposes of subparagraph (A)(ii), the threshold amount shall be --

(i) in the case of a joint return or a surviving spouse (as defined in section 2(a)), $300,000,​

(ii) in the case of a head of household (as defined in section 2(b)), $225,000, and​

(iii) in the case of a taxpayer not described in clause (i) or (ii), $150,000.​

(C) Modified adjusted gross income. For purposes of this paragraph, the term "modified adjusted gross income" means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.

 

[ThomasD]

Most people can't afford a new or a used car right now with or without tax credits.