I just saw my tax return and form 8834 & 8936 tax credit forms clearly displays the max credit is $2,500? Any idea why Tesla is promoting $7,500?
ChopinBlues: As you will see the tax form will ask for placement of service date for the vehicle (Line 3). Based on that, and if you don't have a 2013 date for that, I would be very surprised if you could make a deduction for tax year 13. On your other question, if you are employed you can increase the number of dependends and thereby reduce your witholdings during 2014 to compensate for the expected tax credit from your Tesla. However, have this calculated by a tax professional as you have to be careful not to underpay wihtholdings as this may lead to penalties.
Unless the IRS specifically states you can do something, I wouldn't do it. Even then, as we all know the tax man changeth thy mind as thy wind blows.
@Big T, that is incorrect. I am an inactive CPA, but still versed in taxes. A taxpayer is allowed to pay estimated taxes throughout the year by quarter based on the specific income and allowable expenses for that particular quarter. The estimated payments do not have to be evenly spread. For example, if you get a bonus in December that is 80% of your income for the year, you can pay 80% of your estimated tax due for the year by January 15, and be just fine. Same deal for recognizing a tax credit for a car purchased early in the year.
Your tax preparer will need to include Form 2210, Underpayment of Estimated Tax by Individuals. On that form there is an option to distribute taxable income by quarter earned, and prove that the uneven estimated taxes were paid when due. Like so much else in the tax code it is a complicated form and costs money to prepare, but the option is there.
I think what's confusing about Form 8936 is that line 15 says to enter the credit on that line AND on line 18, even though Line 18 has nothing to do with four wheel cars. So yes, if you follow the IRS instructions in order, and ignore what the instructions for Line 18 say, then I suppose this is easy and straightforward. Anyway, as has been stated before, if you do the form correctly, you will have $7500 in Line 15, 18 and 19 (and probably 23).
My form 8936 has been done correctly - by a CPA and I had another review it. 15, 18, 19, and 23 are all the same - $1,350.
Silly question here maybe,
If I purchased the car and got the 7,500 tax credit, would I get that money back when I file my taxes?
I am planning on using that 7,500 as part of my down payment, so if we don't get that back directly that changes my plans.. Does income bracket and selection of 60 or 85 type depended on the 7,500?
You can only claim the tax credit when you file you taxes in the next year when you file your taxes. I pay quarterlies so I just deducted $1750 from each of my quarterlies I was going to pay. As long as you owe more than $7500 in taxes you will get it back. Not sure there are too many people buying Teslas that don't owe more than $7500 in taxes
Jman it is a credit on 2014 taxes. Whether you get a refund depends on how much you already paid. You could reduce withholding for the rest of the year for example by about $1000/month.
Did my taxes yesterday and got 7500 credit
@weeandthe wads (March 9, 2013)
Plug-In Electric Drive Vehicle Credit (IRC 30D)
Internal Revenue Code Section 30D provides a credit for Qualified Plug-in Electric Drive Motor Vehicles including passenger vehicles and light trucks.
For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.