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$7500 Federal Tax Credit based on VIN or tax filing?

$7500 Federal Tax Credit based on VIN or tax filing?

Hi Everybody,

Happy New Year!

Question:

For the $7500 Federal Tax Credit, I understand that the government rule is that once Tesla manufactures more than 200,000 units, the $7500 Federal Tax Credit would not be available (or reduced). It looks like Tesla is getting closed to the 200,000 units.

I just got 2 of the Model X delivered last month (Dec 2017), but I am anticipating that I am filing extension for my year 2017 tax return. Therefore, my year 2017 tax return won't be filed until Oct / Nov of year 2018.

Therefore, I just want to confirm whether the $7500 Federal Tax Credit is based on VIN number (which means the VIN indicates that the car was manufactured within the 200,000 units) or is it based on the timing of my tax filing?

Thanks a lot for any advice.

Cheers! :)

Rocky_H | 09. Januar 2018

It's not based on the timing of when you file, but based on the actual delivery date of the vehicle.

But really, you have nothing to worry about, because nothing cuts off immediately at 200,000 vehicles. Let's say they deliver that 200,000th vehicle in the second week of a given calendar quarter. The $7,500 still continues for all of the vehicles delivered in that quarter PLUS all of the next calendar quarter too. So since you have already taken delivery of your vehicles and haven't heard any announcement about it, you're totally safe that you get to file the tax credit for them.

Rocky_H | 09. Januar 2018

Oh, and I wasn't specific enough: Since you took delivery in 2017, you do file them for your 2017 year tax return.

Uncle Paul | 09. Januar 2018

As Rocky_H says. It does not matter what the manufacturer date is or the date you file your taxes.

The credit is earned the date it is placed into service, usually the date of delivery to the customer.

You will take your credit when ever you file your forms for the 2017 tax year.

tuner1212 | 09. Januar 2018

Hi Rocky_H and Uncle Paul,

Thanks a lot for your wonderful info. I really appreciate.

But CPA thinks differently. I want to show him an IRS article or an article from a big company to show him what you guys are saying is correct.

Do you guys have any link / URL to an IRS article or something?

Thanks

EVRider | 10. Januar 2018

You can easily find this information online, but here’s a link to the IRS instructions for the EV credit form (2016 version, but should be the same for 2017): https://www.irs.gov/instructions/i8936. If you’ve already taken delivery, you have nothing to worry about.

Note that the 200,000 cap applies to vehicles sold in the US, not worldwide.

Maybe you should find a new CPA. :-)

Rocky_H | 10. Januar 2018

Huh. Since your CPA is wrong, I am now really curious in what way. How does he/she think it works?

tuner1212 | 10. Januar 2018

Thanks again for everybody for the wonderful input and feedback! :)

My CPA thinks that it can be related to the timing of the tax filing.

Thanks

bconaway | 03. April 2018

I have the same question as the original poster. I read the comments about it only mattering when delivery was taken and not when taxes were filed, but wondered if anyone ever found a link. The form was not updated to 2017 last time I checked. I guess turner1212's CPA has given me concern.

reed_lewis | 03. April 2018

I has been updated for 2017.

Here is the form: https://www.irs.gov/pub/irs-pdf/f8936.pdf

And the instructions: https://www.irs.gov/pub/irs-pdf/i8936.pdf

And it is based on the tax year you put the car into service. It has nothing to do with extensions, or the like.

reed_lewis | 03. April 2018

Here is the text from the instructions:

"Use Form 8936 to figure your credit for qualified plug-in
electric drive motor vehicles you placed in service during
your tax year. Also use Form 8936 to figure your credit for
certain qualified two-wheeled plug-in electric vehicles."