RXSF

Just wondering if there are any car enthusiasts accountants that can help me out. Also note that I am not making this thread to learn how to "game" the system, but just want to know all my options before going out there to buy a car during Covid.

As I understand it, current EV rebates are as follows.
Federal 7,500 tax credit - No income restriction to be eligible
CA Clean Fuel Reward - $1,500 immediately taken off purchase at dealership, no income restriction to be eligible
CA Clean vehicle rebate project - $2,000 if income <$300,000 for joint + $2,500 if income is below 400% poverty level (2 household ~ $70,000)
PGE - EV Rebate for Charger Installation - $1,500 if income below 400% poverty level

During normal times, there would be no way that I would qualify for the low income additions, but because of COVID, my income was actually negative and my AGI on my 2020 tax return shows a negative number. (Dont you just love depreciation?)

The only thing I can pull up on each programs website is that it will use the latest tax filing you have submitted to the IRS as income verification. As such, I would then qualify for said low income rebates, yes? The only thing I think I need to worry about is making sure I am paying some taxes for 2021 so that I can get the Fed 7500 tax credit.

Background: my 2018 BMW X1 lease is due Nov 21. I am selling it to carmax for a slight profit and probably will jump into a Hyundai Kona EV since I cant wait any longer for the Audi Q4 Etron.

Thanks for any advice or direction.

mmarshall

Might want to PM BrettJacks....if he has not already seen this thread. He works as a tax-consultant.

swajames

You pretty much have it right, including the fact that you need a tax liability in excess of the federal credit to be able to take the maximum credit.

On the CA Clean Vehicle Rebate project, that does run out of funds from time to time and you can get waitlisted but for now at least it has available funds but it usually takes forever to get the rebate. Also, you usually don't have to prove income with the application unless you are selected for income verification. If they do select you, you have to authorize them to access tax information.

Keep us posted!

dojoman

iTrader: (5)

So this yr if I don't owe IRS $7500 I don't get this back from buying EV car? Seem like huge oversight lots of buyers probably don't even read fine print. I thought I would get a refund check regardless you owe money or not.

swajames

The federal tax credit can only be fully utilized if you have a federal tax liability at least as much as the credit. If you had a liability of, say, $5000 then would be able to offset $5000 of a $7500 credit. You won’t get a refund, just an offset, and any balance doesn’t carry over.

dojoman

iTrader: (5)

GTK. If I'm in the market for EV I'll sell a bunch of ESPP so that I owed more than $7500.

JeffKeryk

And remember, the Federal Tax Credit ends for a car manufacturer after a certain amount of sales. For example, I believe Teslas, Bolts and Leafs are no longer eligible.
Better check out that gorgeous Taycan!

EZZ

That's why I'm waiting for the new bill to be passed (or if it ever does).

dojoman

iTrader: (5)

BMW i4 M50 is on my top list of EV but I need to see it in person for the ugly grill. Taycan is really nice but way out of my budget and range is too little for $100k starting.

EZZ

Did you check out Lucid? The Air Pure start around $77k and is well equipped at that price. It also has 480hp. The i4 M50 isn't all that special performance wise...about the same as the older gen M3.

bitkahuna

iTrader: (20)

i don't follow this. if a person had already paid $7500 or more in federal taxes for example (through payroll deductions or estimated payments, filings, etc) and has paid everything they should have then that credit will apply (reducing their fed tax obligation by $7500) and thus they'll get a $7500 refund.

if on the other hand they didn't pay enough taxes, let's say they've paid $5000 but owe another $5000 in fed taxes, then their total fed tax is $10K, and before credit they'd owe irs $5K but with $7.5K credit they now get a $2.5K refund instead.

or have i misunderstood something?

dojoman

iTrader: (5)

Lucid is too new I want EV built by legacy auto makers. i4 0-60 is quick enough for me I’m not that really into getting the most out of launch speed. I also really like the widescreen infotainment formfactor of BMW, most hate it but i actually like iDrive OS. I may consider i4 standard model.

swajames

We're looking at this from different perspectives but we're both correct. The key point is you do have to have a minimum of $7,500 in federal tax liability to utilize the full $7,500 federal tax credit. That's separate from the accounting for your payroll withholding or any estimated payments you've made. If you have already paid $7,500 via estimated tax payments or withholding etc, then yes would you get 7.5K back - but it's refund of what has now become overpaid withholding, not a refund of the EV credit itself. If you have only $5,000 total fed tax liability, then you're only soaking up 5K of the EV credit - you won't see the extra 2.5K. You'd get your 5K back if you had paid it via withholding etc. Same principle as before. If you have a 7.5K liability, but haven't made any estimated/withholding payments, the 7.5K you otherwise owe is offset by the credit.

The main point was that if you have no liability, you're simply unable to use the credit and you're not seeing any of the 7.5k. There's no refund for tax you haven't paid. And if you have more than zero but less than 7.5K, you're not getting the difference in the form of a refund. You can't turn a 5K liability into a 2.5K refund because you qualified for a 7.5K EV credit. You turn that 5K liability into zero, and whether you get any actual cash back depends upon whether you'd already paid the 5K or not.

JeffKeryk

Every year you have a tax burdon based on adjusted earnings. It doesn't matter if you have prepaid anything. You are entitled to a tax credit (not writeoff) of $7500. A dollar for dollar credit up to $7500 in that tax year.
If your tax burdon was $10,000, it would reduced to $2500.
A burdon over $7500 is (burdon - $7500.
$7500 and less would be reduced to 0.

bitkahuna

iTrader: (20)

we're all saying the same thing in different ways. thanks.