$7500 tax credit

$7500 tax credit

I bought car on s corp and it's 100% use for business. Now if my corp doesn't have enough income(less than 10k), will i be still able to get $7500 tax credit?

TheGrinch | 12. April 2019

It was for the year 2018 a 7500 tax liability credit. But only if you was to owe 7500. With 10k income you would not see that. I only used 4500 of the 7500 bar sue that was my tax liability.

gmr6415 | 12. April 2019

You can't get credited more than you owe and the credit does not carry over into the next year.

I thought we were easily clear for the full $7500, but ended up with too many other deductions and credits, so we found a few large items that could be depreciated over 7 years in order to get the full credit.

tew ms us | 12. April 2019

"S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes."

gmr6415 | 12. April 2019

@tew ms us, it's not quite that easy:

Reasonable Compensation
S corporations MUST pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation BEFORE non-wage distributions may be made to the shareholder-employee. The amount of reasonable compensation will never exceed the amount received by the shareholder either directly or indirectly.

gmr6415 | 12. April 2019

@samirtalati, My wife and I run two S-Corps, one LLC and one farm which falls under similar rules as an S-Corp. The taxes get very complicated. Consult with an accountant.

For example. My wife's LLC and S-Corp make enough for her to deduct personal medical insurance costs. My S corp and Farm in some years don't make enough equal to or greater than the whole cost of my medical insurance; therefore, I cannot deduct the full amount of my medical insurance costs because those costs exceed what the S-Corp and Farm profit collectively. I can only deduct an amount of my medical insurance equal to or less than profit less reasonable compensation.

I believe your S-Corp's $7500 tax credit for the purchase of the Tesla would be treated similarly.

Talk with an accountant. We use BDO.