Anybody know if the $7500 tax credit has to be used the yr the car is bought or can be deferred to another year?
It must be used the year it is bought.
What is the issue? With more details we can provide more guidance...
It can't be deferred and if for some reason you can only take a partial amount of the credit, you can't get the remaining amount in a later year.
My CPA just asked me about the Tax Credit. Does anyone know if there is an IRS form or a form provided by Tesla to take the Credit?
Need more Info
Uyen Khanh &
Tell your CPA the $7500 credit is still pending the IRS Updating Form 8936, supposed to be sometime in March.
The IRS started accepting form 8936 the first week of March. Your CPA's tax software should have the form. Here is a link to the form at the IRS web site.
I can't find/remember the link, but there is also an IRS website that lists all of the cars eligible for the tax credit, along with the tax credit amount for each. But just to confirm, the Model S is eligible for a $7500 tax credit.
There is also an IRS worksheet called 'Form 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit Worksheet', but you do not need to submit this. Only Form 8936 is required.
On the form, make sure your CPA/software/etc enters $7500 on line 15 and 18a/b. The $2500 limit does not apply to the Model S.
Your CPA is asking you about the tax credit? Isn't that what you are paying him/her for?
I tried e-filing last week through http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free. The electronic version of the Form 8936 was available, but when I tried to to e-file, the form didn't pass the validation test. I've e-filed through this site for years without a problem, so I'm thinking the IRS may still be having a software issue with the electronic form. The rejection email told me to mail in the return which I did the next day.
I e-filed with TurboTax pver 10 days ago. It worked fine, though I still don't have my rebate yet.
I e-filed through the IRS site on 19 March. Was surprised I received the acceptance email within 30 minutes. Hope to have the refund within 2 weeks.
Refund? I thought we get a tax credit directly against taxes owed.
No, it's a refund of the excess of tax paid+credit over the total due. Just like an overpayment from withholding.
Your tax bill is $10,000. During the year, you paid more ($12,000).
Ok, you paid $2,000 more than you should have so you will get a refund of $2,000.
However, now with your Tesla purchase, with the same situation, you get a Tax Credit of $7,500. This is subtracted from your bill of $10,000. So now your new tax bill is $2,500. But you paid $12,000. So you will now get a refund of $9,500.
If, instead your tax bill is less than $7,500 (let's say $4,000), your $7,500 credit would be more, so now your tax bill will be zero. (You cannot get a credit more than your tax.) Then whatever you paid toward tax for the year would be refunded.
In California, we also get a $2500 rebate. This has nothing to do with taxes. It is a check sent to you when you make the claim.
Other states have different programs - some have nothing.
Tell your CPA put Tentative credit $7,500 in to line 4 and line 15 of form 8936. that was it.
Demand that your tax professional do the research. That's what you are paying them for.
I watched my tax account (at a big 10 firm) try to interpret Form 8936. There is no doubt that it is confusing. If you read the questions literally, you will not come up with a $7500 credit. But if you force the $7500 credit, it seems to take it, at least on my accountant's tax software. Typical confusing government program - no good reason why it isn't simple.
I'm sorry, but I disagree docdac. If you just go over it quickly, it may be confusing, but if you follow the instructions sheet (not the instructions on the form, but the seperate instructions sheet that is included with the form) step-by-step, then it's not ocnfusing. You don't have to force it.
As far as I know, every IRS tax form has an accompanying instruction sheet. If you or your tax professional are dealing with a new form that you haven't seen before (and you're not using software that already has all of the rules built in to guide you), then it seems like a no-brainer that you should read the instructions to make sure you do it right.
The full instructions are included with the form on the IRS web page. I don't know how your tax professional could miss it, and especially, if they thought it seemed confusing or didn't make sense, then you would think that the first step would be to go check at the official source:
The instructions are right there on pages 3 and 4 of the PDF.
I agree that it could have been more straightforward and that they overcomplicated it a bit, but still, if you follow the instructions step-by-step, it's not confusing.
Also, even without reading the full instructions first, it says right there on line 4 "If the vehicle has at least four wheels, enter the tentative credit (see instructions)".
Clearly from this form alone, you don't know what the "tentative credit" is, but you see that the instructions will tell you more. By following that, you will see that for the Model S, the tentative credit is $7500. And then, even without reading the detailed isntructions, if you just follow what the form says, you will see that the $7500 from Line 4 is carried forward to additional lines later on the form.
It's not really that hard. You should demand a penalty discount from your CPA for his/her incompetence and hand me the difference.
@olanmill: 'confusing' is in the eye of the beholder. The instructions for line 15 are particularly bad. Three 'If's in one instruction. It is easy to miss the third part of line 15 instruction that says to skip lines 16 and 17. Technically, correct, but definitely confusing. Though, typical IRS, I suppose.
BTW. (My accountant got it right after re-reading it several times).
For those in CA, the Clean Vehicle Rebate Projest still has funds. I filed my application on Mar 19 for the $2,500 rebate & on Mar 21, received confirmation from both CVRP staff & John Anderson from the Energy Center my application has been approved & the funds for $2,500 has been set aside, pending receipt of my supportive documentation within 14 days to disburse the funds.
@docdac, I definitely agree, the form is needlessly confusing and complicated. However, given that you have hired a person whose job and expertise and time should center on this kind of stuff, I would expect better.
Is anyone else who uses an accountant having issues with getting them to interpreted the EV federal tax credit? My accountant is saying that the $7,500.00 credit has not been decided upon and is still TBD (to be decided)???
WTF is going on with this, I thought it was a done-deal?!?!?
What do I tell my accountant to do(?), April 15th is next Monday!!!!
What is up with these guys?
As I mentioned in another thread, and above, a plain reading of the form (http://www.irs.gov/pub/irs-pdf/f8936.pdf) will tell your accountant that you are eligible for the refund, and this page, (http://www.irs.gov/Businesses/Qualified-Vehicles-Acquired-after-12-31-2009) which is also linked from the instructions page of the form, clearly state that the credit is $7500.
I already filed this with TurboTax, and the IRS already accepted and approved my return, and got my refund (with the $7500 tax credit included) a couple weeks ago.
TikiMan, your accountant is wrong.
You need a different accountant, TikiMan,
If I got my Tesla in March 2013, how soon can I claim my $7,500 credit on my fed tax return? Do I have to wait basically a year until filing my 2013 tax return next March-April 2014?
@lippiornstil, yes, but you could just adjust your withholding if you want to get your money sooner.
As the son of an accountant, I feel I must advise you Tiki to get a REAL accountant, and fire the charlatan you're currently talking to.
if I purchase the Model S later in December month 2013. but the car delivery is on Feb of next year (2014), which tax-credit year should I claim? 2013 or 2014?
When the car is "placed in service," probably 2014.
You get the credit when you spend the money. So you file on your taxes for the year you spent the money and closed the deal.
It's a credit and that is just what it says. A credit. It carries forward as a credit. So if you owe a dolar in taxes you can use one dollar of the credit to get the dollar back. Basically lowers your tax liability dollar for dollar. But you do need to owe taxes to use the credit against what is owed.
Took the credit for a Leaf in 2011 and took it for another Leaf in 2012 and will use it on 2013 taxes for my S in 2013. It's really not very complex.
Actually, the credit applies to the year the car is placed in service, not the year when you spend the money. And it CANNOT be carried forward or deferred. If you placed the car in service in 2013 and end up with a $5,000 tax liability for that year, the credit will wipe out your tax liability, but the extra $2,500 is lost.
olanmills, thank you so much - but i have to say, it does take some digging. The guy who does my taxes was baffled - and he's not dumb, lazy or incompetent - so maybe the IRS figured out a way to reward only those who persevere ;-)
@DouglasR is absolutely correct; it's a credit, but it's non-refundable so you must have enough tax liability to get it. And it is absolutely not about when you buy it but when it is placed in service (except here in Texas, but that's a whole other story!).
The word "owe" refers to initial tax total before any payments made but after any other deductions taken. Withholding doesn't reduce your refund, IOW.
Has anyone been able to do this while using TurboTax?
see the previous page. olanmills mentioned several times he's already filed and received the refund through TT.
I just filed my taxes using turbo tax. Turbotax did have the computer program set up to handle electric car credits in the deluxe version.
@mcx-sea, yes, the ability to file for the credit is available for TurboTax Deluxe and above. I used TurboTax Deluxe (online version) and only paid $30.
There was some initial confusion as TurboTax did not properly handle the EV credit form until mid-February (it was partially the IRS's fault, but still, TurboTax's software could have handled it better), but now it works just fine. I e-filed my returned and received the refund via direct deposit a couple weeks later.
I used Adobe to complete the PDF fillable form. It only cost me $0, but the stamp was $0.46 :)