Discussion : All discussion regarding Model 3 and Tax credit in model 3 subforum

[MP3Mike]

Could someone buy a qualifiing EV, keep it for 3 months, then sell it and buy another qualifying EV, and then claim both tax credits ($15k) ?

Yes, as long as you didn't purchase the first one with the plan to sell it. (Since you asked this question, it would seem like you wouldn't be able to claim the credit on the first one because you planned to sell it.)

Now, if you purchased one, and found you didn't like it, and then sold it to buy a different one, then you shouldn't have a problem claiming the credit for both.

 

[whisperingshad]

While the above is accurate it's also a bit misleading because it mentions "if you take zero out of check all year"

The amount you take out of your check has nothing to do with how much you owe in taxes when filling them out...and no impact on how much (or how many) EV tax credits you can claim.

If your tax burden for the year is $13,000 and you "took out" 0 from your check your burden is 13k, and that's the relevant amount for max amount of EV credit you can use. In this example taking the credit twice would reduce your burden to $0 and you'd get $0 refund and owe $0.

If your tax burden for the year is $13,000 and you "took out" $13,000 from your check your burden is... still 13k, and that's still the relevant amount of max amount of EV credit you can use. In this example taking the credit twice would reduce your burden to $0 and you'd get a $13,000 refund.

incorrect

If tax burden was 13k, and you took 0 out of check for fed tax then your Tax due would be 13k -13k for a net of $0
If tax burden was 13k, and you took out 13k out of check for fed tax then your Tax due would be 0. You would not be able to use the 13k ax credit to get a 13k refund, as it is a NON-REFUNDABLE tax credit...

 

[MP3Mike]

If tax burden was 13k, and you took out 13k out of check for fed tax then your Tax due would be 0. You would not be able to use the 13k ax credit to get a 13k refund, as it is a NON-REFUNDABLE tax credit...

That is incorrect. The $13k would be refunded. The non-refundable portion is the portion you didn't pay in, the extra $2k that was available.

 

[daniel]

I have found that the IRS is an excellent resource for tax information. With a basic question like "Can I claim more than one tax credit?" if you don't have a tax accountant you can ask, you can phone the IRS. You don't have to identify yourself if you're not looking for a binding ruling. There's probably a limit as to how complex a question they'd be able to answer over the phone.

I thought that you had to keep a car for a specific length of time in order to claim the tax credit on it. But that's just something I thought I read somewhere. The IRS could answer that question for you also. They have a bad rap because nobody likes paying taxes, and even less getting audited. But in my experience they are very nice.

 

[King David]

incorrect

If tax burden was 13k, and you took 0 out of check for fed tax then your Tax due would be 13k -13k for a net of $0
If tax burden was 13k, and you took out 13k out of check for fed tax then your Tax due would be 0. You would not be able to use the 13k ax credit to get a 13k refund, as it is a NON-REFUNDABLE tax credit...

Untrue. It has nothing to do with your withholdings. It's tax liability, not tax DUE. So if you had liability equal to or greater than the credit, you get the full credit- regardless of what you had withheld. If your liability is less than the credit, you'll get your full liability back but nothing more. So if you have liability of $5k, you get a $5k credit, you don't get $7.5k.

 

[DP26]

The credit is against liability for the TY. Period. What you had withheld or deposited is not a factor for eligibility. The non refundable aspect means you cannot reduce your liability below zero with this credit.

Seriously folks, if you are not grasping how the credit works, pay for advice. If you can afford a Tesla (in this scenario, TWO) you can afford a tax pro.

 

[DP26]

I have found that the IRS is an excellent resource for tax information. With a basic question like "Can I claim more than one tax credit?" if you don't have a tax accountant you can ask, you can phone the IRS. You don't have to identify yourself if you're not looking for a binding ruling. There's probably a limit as to how complex a question they'd be able to answer over the phone.

I thought that you had to keep a car for a specific length of time in order to claim the tax credit on it. But that's just something I thought I read somewhere. The IRS could answer that question for you also. They have a bad rap because nobody likes paying taxes, and even less getting audited. But in my experience they are very nice.

Call the IRS? You may as well call a random number, or maybe stop in somewhere for a palm reading for advice. Calling the IRS is no guarantee of anything since they are not giving you a ruling you can hold up to a judge. A tax pro giving advice is better. They have E&O insurance which will pay you for any professional error or omission.

 

[DP26]

Exception of note. If you claim a state credit/rebate, there may be a hold period. CA is one. States can monitor ownership via registration, and can easily have an enforceable claw back if you do not retain for the required time.

 

[ucmndd]

incorrect

If tax burden was 13k, and you took 0 out of check for fed tax then your Tax due would be 13k -13k for a net of $0
If tax burden was 13k, and you took out 13k out of check for fed tax then your Tax due would be 0. You would not be able to use the 13k ax credit to get a 13k refund, as it is a NON-REFUNDABLE tax credit...

JFC how do so many people still not understand this

 

[ucmndd]

Tesla site is now showing that ALL Model 3 configs, including RWD, are eligible for full $7500 tax credit.

That Elon Huffing Sawyer Merritt guy on Twitter is corroborating and Elon re-tweeted.

Interesting development...

 

[whisperingshad]

Untrue. It has nothing to do with your withholdings. It's tax liability, not tax DUE. So if you had liability equal to or greater than the credit, you get the full credit- regardless of what you had withheld. If your liability is less than the credit, you'll get your full liability back but nothing more. So if you have liability of $5k, you get a $5k credit, you don't get $7.5k.

Thats what I said lol

 

[whisperingshad]

Exception of note. If you claim a state credit/rebate, there may be a hold period. CA is one. States can monitor ownership via registration, and can easily have an enforceable claw back if you do not retain for the required time.

YUP. cvrp is 36 months prorated

 

[whisperingshad]

Case and point my coworker bought a car 2 years back, late in year, was only able to use less than half of his federal tax credit. That is why you need to plan stuff out, withholding, etc.....except for the shady tax ppl out there...

As for several of you that disagree with it, show me data....honestly though I think you are just reading what I am saying incorrectly

 

[ucmndd]

...honestly though I think you are just reading what I am saying incorrectly

Then you probably need to consider how you’re saying it.

How much you withhold from your paycheck every week/month/whatever has nothing - NOTHING - to do with your tax liability and how much of the EV tax credit you’re able to claim.

 

[King David]

If your tax liability is 13K, and you withhold $20k, and get a $7.5K tax credit for buying a Model 3, you will get a refund of $14.5K. Essentially the $7.5K gets added to your withholdings, therefore in this example:

20k (withholdings) +7.5k (ev credit) -13k (liability) = 14.5k refund.

Math is fun.

(Now whether or not you can claim multiple ev credits in a calendar year is vague, though I believe you can)

 

[MP3Mike]

If your tax liability is 13K, and you withhold $20k, and get a $7.5K tax credit for buying a Model 3, you will get a refund of $14.5K. Essentially the $7.5K gets added to your withholdings, therefore in this example:

20k (withholdings) +7.5k (ev credit) -13k (liability) = 14.5k refund.

Not exactly, it isn't added to your withholdings, that would make it refundable, it is subtracted from your liability:

13k (liability) - 7.5k (EV credit) = 5.5k (net tax owed) (This can not go negative.)

20k (withholdings) - 5.5k (net tax owed) = 14.5k refund.

 

[King David]

Fair. That's why I said "essentially", as some people weren't getting it- was just keeping it simple

To your point if you had 6k in liability and 20k of withholdings, you would not get the full 7.5k credit, only 6k. You would only get the 20k back. It would not be 21.5k

 

[Knightshade]

incorrect

It's really not.

If tax burden was 13k, and you took 0 out of check for fed tax then your Tax due would be 13k -13k for a net of $0

Which is exactly what I wrote.

If tax burden was 13k, and you took out 13k out of check for fed tax then your Tax due would be 0. You would not be able to use the 13k ax credit to get a 13k refund, as it is a NON-REFUNDABLE tax credit...

This is flat out 100% wrong.

"tax due" is irrelevant.

Withholding is irrelevant.

Tax BURDEN is the only relevant number.

It works exactly as I wrote in the post you quoted.

Non-refundable means you can't get more than your tax burden out of the credit.

Your withholdings aren't even looked at on the 1040 until after the EV credit is applied.

You'd get get 100% of your withholdings refunded if your EV credit was equal to or greater than your tax burden.


Take a look at a 1040. Look at the order things are computed line by line. Should become obvious why you're wrong.


If not, read on:

The overly simplified way to consider this is look at line 16 without any non-refundable credits considered yet... That is your initial tax burden.

You can reduce that amount, dollar for dollar, for all non-refundable credits available.

If you get to 0 and still have non-refundable credits, you lose the overage.

If you still aren't at 0 you can now reduce that amount, dollar for dollar, for all refundable credits.

If you get to 0 and still have refundable credits you DO NOT lose that overage- it becomes the initial amount of your refund.

THEN, and ONLY THEN, would you look at your withholdings at all

If you were already at 0 with the above then you take your total withholdings and add 100% of it to your refund
OR
If you never reached 0 after all those credits, you reduce the remaining tax burden dollar for dollar until you reach 0 any remaining withholdings is your refund.

If you STILL don't hit 0 by the end of withholdings, that's your tax bill.

 

[pipestem]

Thanks for the responses. I think the ‘credit’ part is clear in my case.

long as you didn't purchase the first one with the plan to sell it.

Good thing to know. How would IRS know your intent ? Or rather how would you disprove it? In my case I would be gaining 8 months of warranty for no extra cost which seems pretty reasonable. (8 months because we bought a loaner and Tesla maddeningly started the warranty clock early).

Unfortunately I have previously had zero luck calling the IRS. As in no answer, no call back. The matter was resolved in my favor but took 9 months.

 

[Knightshade]

Good thing to know. How would IRS know your intent ? Or rather how would you disprove it?

They wouldn't. IRS enforcement is pretty near 0 in general outside of really obvious cases of fraud, let alone something like this.

Now if they DID, for some weird reason, actually audit you anyway, then obviously they'd need some sort of evidence. Your post saying you're buying with the intent to resell it would qualify

OUTSIDE of them tracking that down, and assuming you don't say anything incriminating yourself, only thing that might be an issue is if you rebought the same vehicle you previously sold or something.... versus buying an at least marginally different EV, for example if you bought a 3, drove it for a few months, then "decided" after the purchase your really need a hatchback, so you sell it and buy a Y instead....or even if you buy an SR and then decide you need more range or performance.