US Federal $7,500 Electric Vehicle Credit Expiry Date By Automaker

[mongo]

I thought it didn’t matter what I claim. For instance I had a tax liability of 7k this year but didn’t owe anything and got a little bit of a refund. Wouldn’t I still get the 3750 credit and just get it on my refund?

Yes, the credit lowers your tax bill for the year and would result in a refund if not accounted for earlier.
Adjusting W-4 withholding makes it so you owe nothing and get no refund at the end of the year due to getting that 3,750 spread out in your paychecks.

Owing at the end of year is just settling up on the total tax for the year.

 

[Knightshade]

I thought it didn’t matter what I claim. For instance I had a tax liability of 7k this year but didn’t owe anything and got a little bit of a refund. Wouldn’t I still get the 3750 credit and just get it on my refund?

What you claim doesn't matter to qualifying for the credit- but it's a way to get the $ from the credit sooner.

Let's pretend there is no credit, you would normally have that 7k of tax liability, and with your current withholding you had 7.5k held back- that seems to fit what you had happen last year- you "owed" nothing, and got a small refund.

Now same situation, but with adjust the withholding so they only take 4k out during the year. You still have 7k of liability- and would normally "owe" $3000... but now the credit offsets that 3k and also offsets $500 you already pre-paid from withholding- so you'd get a $500 refund on top of having gotten the 3k "sooner" bit by bit in each paycheck.

 

[Roman92]

What you claim doesn't matter to qualifying for the credit- but it's a way to get the $ from the credit sooner.

Let's pretend there is no credit, you would normally have that 7k of tax liability, and with your current withholding you had 7.5k held back- that seems to fit what you had happen last year- you "owed" nothing, and got a small refund.

Now same situation, but with adjust the withholding so they only take 4k out during the year. You still have 7k of liability- and would normally "owe" $3000... but now the credit offsets that 3k and also offsets $500 you already pre-paid from withholding- so you'd get a $500 refund on top of having gotten the 3k "sooner" bit by bit in each paycheck.

Thank you!

 

[TT97]

Just make sure you're actually eligibly for the credit (ie, have at least $3750 in liability, which generally isn't difficult for someone who can afford a Tesla but it can happen) otherwise you will be on the hook for it come tax time (and possibly some penalties as well).

By eligible, do you mean actually having tax liability to offset the $3,750? If you have less than $3,750, then you would just get a partial credit and your tax liability would be zero for the year - there would be nothing you would be on the "hook" for.

 

[Zoglog]

Man I feel really dumb for buying a model 3 performance last sept rushing to get the full tax credit.

configing a similar model 3 performance now WITH self driving vs my EAP ends up being 1k less after taxes and rebates all get calculated out.

And if I end up paying 6k to upgrade to self driving I'm going to have paid 7k more than if I had waited a few months. Feels bad lol

 

[ChrisH]

Man I feel really dumb for buying a model 3 performance last sept rushing to get the full tax credit.

configing a similar model 3 performance now WITH self driving vs my EAP ends up being 1k less after taxes and rebates all get calculated out.

And if I end up paying 6k to upgrade to self driving I'm going to have paid 7k more than if I had waited a few months. Feels bad lol

Yep. It sucks for sure. At least the car keeps getting better with OTA software updates.

 

[dsvick]

I could see the appeal for someone to buy every EV eligible for the $7,500....sell them right away...and get the tax credit, for every one of them. You're guaranteed to come out ahead, maybe? Who's with me?

If you have enough income that your tax liability is high enough to do this for more than a couple of cars you're probably already making enough money that you don't need to do it.

 

[MoHazee4]

Man I feel really dumb for buying a model 3 performance last sept rushing to get the full tax credit.

configing a similar model 3 performance now WITH self driving vs my EAP ends up being 1k less after taxes and rebates all get calculated out.

And if I end up paying 6k to upgrade to self driving I'm going to have paid 7k more than if I had waited a few months. Feels bad lol

The struggle is real - i feel your pain.

It's pretty messed up of Tesla - so change pricing so quickly. Really does make anyone who bought the car in 2018 feel like a sucker, when you see pricing today.

 

[Knightshade]

The struggle is real - i feel your pain.

It's pretty messed up of Tesla - so change pricing so quickly. Really does make anyone who bought the car in 2018 feel like a sucker, when you see pricing today.

Eh, I just "built" the car I took delivery of September 2018, same options/features... it's $5500 less than what I paid... I got $3750 more tax credit.

Meaning I "paid" $1750 more than if I ordered one today (actually nearer 1500 since I think destination charge is a couple hundred higher now than when I bought it).

Meanwhile I've gotten to drive the thing for the 6 months in between, saving ~200 a month on gasoline...which means as of this month I'd actually be slightly ahead compared to buying today.... and I've gotten 6+ months of having a vastly nicer drive to/from work thanks to EAP as well.

 

[wdolson]

The closest equivalent to the car I bought three years ago is about $15K cheaper than what I paid before the incentive, and the new cars have 70 more miles range, AP 2.5, and some other upgrades over what I bought.

Tesla's model works great when they are production limited, but it doesn't work as well when they are demand limited. For the S and X they have become demand limited. I'm not sure about the Model 3. In the US they might at this point. They are building a lot of Model 3s for overseas right now.

I expected Tesla to drop prices when the incentive started to go away. The end of the incentive was boosting demand and right now a lot of potential S and X buyers are waiting to see if a refresh comes out this year. The Model 3 market might be a bit suppressed by those waiting for the Model Y.

 

[dsvick]

I bought a LR, rear wheel drive, MSM, with EAP in October for $56,700, less the full tax credit is $49,200. The closest I can get now is LR, all wheel drive, with FSD for $56,500, less the partial credit is $52,750. So, I guess I could have gotten both all wheel drive and FSD for less than $4K but I've been having fun driving it so I don't care!!

 

[Zoglog]

Yep. It sucks for sure. At least the car keeps getting better with OTA software updates.

True I just wish the EAP to Self driving price was more reasonable. We already paid extra cost last year of 5K for EAP and 2-3k for the upgrade feels more reasonable.

 

[Silver Ghost]

Man I feel really dumb for buying a model 3 performance last sept rushing to get the full tax credit.

configing a similar model 3 performance now WITH self driving vs my EAP ends up being 1k less after taxes and rebates all get calculated out.

And if I end up paying 6k to upgrade to self driving I'm going to have paid 7k more than if I had waited a few months. Feels bad lol

I did the same thing.
I am glad that I did it - as I got to enjoy the car for this much longer and set my Neighbour mustang - that woke me up everyday with its loud muffler in its proper place. He lost the race to the P3D+ and no longer revs the engine on the mustang at 6:00am. I would have paid more to sleep in for a few min in the morning.

 

[Socal3XXXX]

Sorry if mentioned before, but is it stated or mentioned if the federal credit extension is raised to 400,000 EVs. Would it be effective for EV purchased after the bill passes or it will retro every EV purchase in 2019 since they received the $3750 lower amount?

Thanks

 

[MP3Mike]

Sorry if mentioned before, but is it stated or mentioned if the federal credit extension is raised to 400,000 EVs. Would it be effective for EV purchased after the bill passes or it will retro every EV purchase in 2019 since they received the $3750 lower amount?

The depends on how it is written. But nobody has received $3,750 yet, they won't until they file their taxes next year. So I would assume that it would be retroactive to 1/1/2019 if it passes.

 

[ItsNotAboutTheMoney]

Sorry if mentioned before, but is it stated or mentioned if the federal credit extension is raised to 400,000 EVs. Would it be effective for EV purchased after the bill passes or it will retro every EV purchase in 2019 since they received the $3750 lower amount?

Thanks

If the extension passes, it will be retroactive, and the IRS will send you a package with a bottle of champagne, a box of chocolates and a bouquet of roses.

More seriously I don't think it has any hope of passing, but if it did pass, and the senate wording were used, then you can refer to the bill's text:

Text - S.1094 - 116th Congress (2019-2020): Driving America Forward Act

If enacted in time for settling of 2019 taxes, the tax credit amount for Tesla vehicles sold in 2019 (barring another miracle) would be $7,000. The Driving America Forward Act:
- makes the period after sales reach 200k a Transition Period
- reduces the _base_ amount to $2,000 for the Transitional Period (reduced from $2,500).
- changes the Phaseout Period cliff to the 2nd quarter after the quarter in which sales reach _600k_
- (except that sales from when the manufacturer passed 200,000 to the date of enactment of the act are ignored from calculation of the Phaseout, effectively adding more sales to the Transition Period for Tesla and GM)
- makes the Phase Period shorter with 2 quarters at 50% and eliminates the 2 quarters with 25%

 

[insaneoctane]

True I just wish the EAP to Self driving price was more reasonable. We already paid extra cost last year of 5K for EAP and 2-3k for the upgrade feels more reasonable.

Wasn't the FSD upgrade only 2K in April?

 

[wdolson]

Congress has a lot of things in their collective plate this year. There is a looming economic cliff in September and a lot of people are worried (including people in Congress) that Congress is not going to get anything through and signed in time. There are also some other minor kerfuffles here and there that are distracting people.

I don't expect much legislatively on the EV front this year or next year. Something may happen in 2021.

Rather than a tax credit, which only favors those who owe enough in taxes to take advantage of it, I would rather see a rebate program where $7500 is taken off the car at delivery.

 

[Zoglog]

I did the same thing.
I am glad that I did it - as I got to enjoy the car for this much longer and set my Neighbour mustang - that woke me up everyday with its loud muffler in its proper place. He lost the race to the P3D+ and no longer revs the engine on the mustang at 6:00am. I would have paid more to sleep in for a few min in the morning.

seems like a rather immature reason but ok.....

Wasn't the FSD upgrade only 2K in April?

It certainly isn't right now

 

[Niroc]

Yes, the credit lowers your tax bill for the year and would result in a refund if not accounted for earlier.
Adjusting W-4 withholding makes it so you owe nothing and get no refund at the end of the year due to getting that 3,750 spread out in your paychecks.

Owing at the end of year is just settling up on the total tax for the year.

Tough to do with new tax laws. It is pure guess on how much to deduct unless you pay a tax advisor to figure it out