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Tax Credit dopped to $2500???

Tax Credit dopped to $2500???

I just learned from my accountant a last minute drop in tax code this month put the tax credit 2013 to $2500 from $7500 limit. I was counting on 2013 being $7500 credit. If this is true there are going to be a lot of upset Tesla owners.
Could this be true?
Jack

Bighorn | February 4, 2014

You might look into getting a better accountant.

Sudre_ | February 4, 2014

Simple Google search does not verify this at all. Everything still says its $7500 for individuals.

Sudre_ | February 4, 2014

You need a new accountant. Fire him.

Already discussed.
http://www.teslamotors.com/forum/forums/7500-tax-credit

rfriess | February 4, 2014

You need a new tax guy.

See

http://www.irs.gov/Businesses/Plug-In-Electric-Vehicle-Credit-(IRC-30-and-IRC-30D)

dated Jan 6, 2014

Bob

Mel. | February 4, 2014

dr.jacks, the answer to your question is no. However, it is really a silly question. Why would you listen to a person that has no understanding of the tax code?

SamO | February 4, 2014

#fail

Velo1 | February 4, 2014

Why do some of you assume the accountant is a male?

AmpedRealtor | February 4, 2014

Holy crap. Where was this accountant's last job, McDonald's?

Mathew98 | February 4, 2014

That was the same person who set up the Madoff pyramid scheme...

After the working the night shift at McDonald's.

firerock | February 4, 2014

I think my TurboTax is doing a better job than your accountant.

dlake | February 4, 2014

Is TurboTax male or female? ;-)

Iowa92x | February 4, 2014

Exactly, TurboTax. The more things you learn to do on your own without paying an "expert," the better.

redacted | February 4, 2014

@Velo1 because most accountants are male?

And why do some of you assume the use of "him" isn't generic?

Roamer@AZ USA | February 4, 2014

Transgender ?

drp | February 4, 2014

Wanna buy some land?

Tiebreaker | February 4, 2014

Or a bridge?

Schlermie | February 4, 2014

You accountant may be confusing the state rebate with the federal tax credit.

carlk | February 4, 2014

Perhaps he (or she) is an IRS double agent.

Roamer@AZ USA | February 4, 2014

http://www.irs.gov/Businesses/Plug-In-Electric-Vehicle-Credit-(IRC-30-and-IRC-30D)

It does concern me that Tesla does not appear to be reporting manufacturing numbers. If you wade thru all this it states IRS approval can be withdrawn if they don't report. The tax credit only applies to the first 200,000 cars sold then it phases out.

They don't appear to be complying with the reporting.

http://www.irs.gov/Businesses/IRC-30D-%E2%80%93-Plug-In-Electric-Drive-M...

Roamer@AZ USA | February 4, 2014
Roamer@AZ USA | February 4, 2014

I hate it when page links truncate.

http://www.irs.gov/Businesses/Qualified-Vehicles-Acquired-after-12-31-2009

Open this then select the Tesla link.

Roamer@AZ USA | February 4, 2014

(2) Failure to Make Timely Quarterly Report. If a manufacturer (or, in the case of a foreign vehicle manufacturer, its domestic distributor) fails to make a quarterly report in accordance with section 5.05 of this notice and at the time specified in section 6.02 of this notice, the acknowledgment letter issued under section 5.04 of this notice may be withdrawn, and purchasers will not be entitled to rely on the related certification for quarters beginning after the date on which the Service publishes an announcement of the withdrawal (generally, quarters beginning after the due date of the report). If the quarterly report is filed subsequently, the Service may reissue the acknowledgment letter and retract the withdrawal announcement.

logicalthinker | February 4, 2014

The neighborhood electric vehicle credit was $2500. That's the credit Luddite accountants know about. Unfortunately that includes my accountant.

BrassGuy | February 5, 2014

Fire him. No matter his gender.
Read line 15 on form 8936. Plain as day if you actually read the whole paragraph.

AmpedRealtor | February 5, 2014

@ Roamer - It isn't possible that IRS simply left Tesla off that table due to an oversight? That seems far more likely than Tesla not reporting numbers and violating an IRS rule. Tesla reports quarterly production in all of its quarterly reports, there is no reason Tesla would withhold this information from IRS.

Velo1 | February 5, 2014

Didn't mean to ruffle feathers asking why assume the accountant is a male. Mine is female and she made the same mistake on both my Fed and Colorado State returns for 2012. It was only through this forum did I gain information the educate her on this car and the tax credits, practically doing her job I paid her to do.

DTsea | February 5, 2014

Tesla reports quarterly, which is what the requirement says. Other car companies report monthly, not required.

@velo1, if you have to educate the accountant, you are paying too much.

Velo1 | February 5, 2014

@DTsea - that's what I told her! But frankly, the biggest issue was with the State of CO, which was granted some Model S owners the tax credit and denying others. The Sate was still trying to figure it out, but the forums help me put my hands on the exact forms and my return with the State was accepted.

I would normally think of finding a new accountant, but her philosophy on taxes is the same as mine - If you have not been audited, then you are paying too much.

GeekEV | February 5, 2014

@dr.jacks.tesla - Is this in California? If your accountant has never dealt with EVs before, it's possible he's confusing the CARB clean air vehicle rebate (which is $2,500) with the federal $7,500 tax credit.

Captain_Zap | February 5, 2014

The Tax Credit is under attack. It was brought up during the budget debates and they are not done with attempting to pull it out from under the industry.

Be sure to contact your representatives to let them know how important it is for the transition to sustainable transportation.
If you commit your money to our future, you should get credit for it.

We need the Tax Credit in place for GEN III. It is only fair.
The tax credit should be available to all who step out of their comfort zone and show the world that it can, and should, get done.

weeandthewads | February 5, 2014

Had the same experience with my accountant. Wrong form

DallasTXModelS | February 5, 2014

The tax credit was written so crazy most people reading it will tell you it is for $2500. That is the minimum credit for a smaller battery car. Then continuing it says it is something like $417 for each additional kWh size of the battery which brings Model S up to the maximum of $7500.

Unfortunately for some people even though the Model S qualified for the full $7500 tax credit because it cannot be used over multiple tax years until the whole $7500 is used it only takes away what you owe on Federal Tax for the year you purchase your Model S.

I get less than half of the $7500 off of my 85 kWh battery car because I owe less than half of the $7500 in taxes. I paid full price for a car that was advertised that the tax credit would make the car more affordable to people that couldn't afford the full price.

Originally the 40 kWh battery version that was dropped after only 5% of the original reservations were for the smallest battery was advertised at $49,990 after the $7500. But to a person that $49,990 seemed almost attainable they find out that the $7500 doesn't apply to anyone that doesn't owe $7500 in federal taxes.

So when the 40 kWh battery was dropped the lowest car was advertised at $63,200 after the $7500 tax credit for the 60 kWh battery. Same problem only now it's even less affordable and the people that need the $7500 credit the most still don't get the whole credit.

People on this forum have said that "then those people should wait for 6 years and buy the $35,000 Gen 3 car so that they can afford it." In the mean time they have to pay as much in gasoline in the difference of the $35,000 dollar Gen 3 and the $71,300 Model S. I say to people on this forum that think that way that people that can afford the $100,000 Signature shouldn't be given a tax incentive to buy a car that they can afford outright.

Captain_Zap | February 5, 2014

@DallasTXModels

There is a fair chance that the tax credit might be gone by the time that GEN III comes along.

Once a manufacturer sells a certain number of qualifying cars the Tax Credit ceases to exist.

Tesla has the potential to reach that number before the GEN III hits the market.

Mel. | February 5, 2014

Now tesla has to sell at least 200,000 cars before the tax credit could be reduced

Captain_Zap | February 5, 2014

@Mel

Yes, but it is quite a while before we'll see GEN III and Tesla is concerned about whether it will last for the GEN III buyers. If it does, it could be limited to the early GEN III buyers if the incentive is not extended or expanded.

DallasTXModelS | February 5, 2014

@Captain_Zap

That's why I went ahead and bought the 85 kWh for the full price. In two months I've already saved $400 in gasoline.

Roamer@AZ USA | February 5, 2014

The fact that Tesla is not listed in this chart indicates to me they are not reporting production numbers in compliance with IRS rules. I bring it up only because it leaves buyers at risk for the credit if the IRS were to cancel the qualification for non compliance with reporting. The instructions are pretty clear and the data is current for other manufacturers.

http://www.irs.gov/Businesses/IRC-30D-%E2%80%93-Plug-In-Electric-Drive-M...

Captain_Zap | February 5, 2014

@Roamer

If you are fairly confident in your assertion, you should send an e-mail to Tesla.

Brian H | February 6, 2014

Dallas;
Careful with your wording. "Owes $7500 in taxes" doesn't mean "still owes at Y/E". That's for the total liability over the year. If your taxes are entirely prepaid with payroll deductions, e.g., it will be refunded, i.e. even if your net balance at Y/E is $0.

logicalthinker | February 6, 2014

^^ that is correct

DallasTXModelS | February 6, 2014

@Brian H

Yes my withholding ($4804.00) taken out all year long is returned to me. That is less than $7500. The irs.gov instructions clearly say it is a tax credit toward taxes owed and if you do not owe the full amount it can not be carried over to the next tax year.
Taken directly from IRS.gov:
Form 8936 credit calculationForm 8936 has three parts. Part I calculates your tentative credit amount, which, in many cases, the manufacturer will have provided with its certification. If the vehicle satisfies the at least the minimum requirements, the credit starts at $2,500. If the vehicle has at least a 5 kilowatt-hours of capacity, you increase the credit by $417, plus an additional $417 for each kilowatt-hour of capacity your vehicle has in excess of 5 up to a maximum of $7,500.After calculating your tentative credit in the first part of Form 8936, the remaining two parts allocate the credit between your business in Part II and personal use of the vehicle in Part III.Tentative credit reductionAs a tax credit, the amount of your qualified plug-in electric drive motor vehicle tax credit reduces your tax bill on a dollar-for-dollar basis. In order to claim the credit, you have to have a tax liability you report on your return. It will not increase your refund beyond what is owed. Depending on your liability and other tax credits you take, you may not see the full tax savings of the tentative credit you calculate on Form 8936. This is because the credit is a nonrefundable credit. Nonrefundable tax credits cannot reduce your tax bill below zero and also reduce your tax bill for a number of other credits taken before reducing the remaining tax bill for your plug-in electric motor vehicle credit.

Mathew98 | February 6, 2014

@DallasTXModelS - You still have time to roll over a portion of your 401K or IRA into Roth IRA for last year and offset the rest of the $7500 you didn't get.

Perhaps a $10,000 conversion would incur the same amount of taxes as your remaining Fed credit.

DallasTXModelS | February 6, 2014

@Matthew98

Thanks for trying to help. I'm sure some others can benefit from your suggestion. I don't have either an IRA or 401K, or Roth IRA, I have a State Retirement and a pretax 457B account.