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?
Maybe you need a new Tax guy? My reading of the law sounds like your accountant didn't take into consideration the size of your battery. All models (85, 60 and 40) will qualify for the full $7500.
See under Form 8936 credit calculation. The credit is $2500 for 5 kWh battery vehicles, + $417 per kWh of capacity up to a maxium of $7500.
So for the Model S, it's $7500.
Thank you tax code for these easy to follow instructions.
Tell your accountant the $7500 credit is still pending the IRS Updating Form 8936. I had the same reaction when I got my returns, and after asking around I learned the full credit should become available in March. Yes, it is March, but this is the IRS and...
rtesta - don't jump! Read this for more info that may save your day:
My accountant and I were going nuts trying to get an answer from the IRS, but then folks here helped shed light on the subject matter. It stinks right now.
You can also refer to the IRS website
That link didn't work. This one does
Copy and paste this link into a new Tab: http://www.irs.gov/Businesses/30D.-New-Qualified-Plug-in-Electric-Drive-...
On Form 8936 Line 4 enter $7500. If you have no Part II Business/Investment Use, enter $7500 on Line 15. Read the line 15 instructions where it says "If the vehicle has at least four wheels, leave lines 16 and 17 blank and enter this amount on line 18" Complete the rest of the form.
Per http://www.irs.gov/uac/List-of-Available-Free-File-Fillable-Forms, Form 8936 will be available for e-filing 03/14/13 at 2:00 p.m. EST.
Thanks for all the replies. Apparently paying thousands of dollars to a tax professional does not buy top-quality tax advice. There are multiple versions of IRS forms around (8834 vs. 8936). Both of them currently say that there is a maximum of $2500, though everyone (Tesla, posters here, other information on the web) agrees that the actual number is $7500 for the 85 kwh Model S. The IRS forms need to be updated, according to one reply. I will have to call my accountant's attention to this issue, and perhaps deduct a percentage from his bill for having almost cost me $5K.
Upon further investigation, Form 8936 is live!
@ I am 3146-- it does not appear to be updated.
I will post as soon as my accountants inform me the form is available.
@KevinR Form is 2012 version.... Crdit amount shows on this site http://www.fueleconomy.gov/feg/taxevb.shtml
I wonder what would happen if you simply strike through $2,500 and write in $7,500? I have had my tax return on hold now for 3 weeks for the IRS update to be implemented.
I understand that-- the irs.gov link to the f8936 form maxs out at $2500 (I followed the link & scrolled down). I am not a tax professional and don't claim expertise but my accountants told me a month ago they had to wait for the form sometime in March. The credit amount is $7500-- we just have to wait for the proper paperwork to claim it.
If you're filing your 2012 taxes, why wouldn't you use the 2012 version of Form 8936? The one online now is good for filing a paper return.
For some strange reason, you cannot click on that first link I posted above. You get a page not found error. But, if you right click on it and do a "Copy Link Location" and then paste it into a new tab, you should get an IRS page for Tesla revised on Jan 7, 2013 that very clearly says Model S qualifies for the $7500 credit.
@Velo1 I think satisfying the IRS "proper form" needs will be more time efficient than getting it bounced back or audited.
read the instructions very very closely - it's $7500
I e-filed with TurboTax with no problems with the current form which was approved earlier this week. IRS has accepted my return.
I don't know what some of you are talking about. The form is fine. It is $7500. You just have to follow the instructions.
Since the form was not yet ready for e-file when I did my return, I mailed in a paper return. Got the 7500 credit and already have my refund deposited. So you are all good to go.
I received the $7500 tax credit last year for my LEAF, and I expect to get $7500 this year for the Model S.
This is a good reminder to read forms and instructions carefully before jumping to conclusions!
And to clarify, the $2500 limit does not apply to pretty much any of you. The $2500 limit is for EV's that aren't "real cars", i.e. vehicles that only go really slow (golf carts), etc.
I dont know if this has been mentioned but...
If you didnt pay/owe 7500 then you will only get however much you paid into taxes.
So if you only OWED/Paid $2500 in Federal Taxes, then you will only get that 2500 back.
If you didnt pay any taxes, then whatever you owe up to 7500 will be covered and you wont owe it.
Or at least I think that is how it works :)
Here's a thought for those who are purchasing a MS in the 2013 tax year, how about increasing your exemptions to pull most the of $7500 tax credit into your paycheck for the remainder of the 2013 tax year.
When it comes time to file your 2013 taxes, your exemption claim will drop accordingly, thus pushing our tax liability close to the adjusted $7500 tax liability. I'm sure there's a lot calculation involved to get the proper number exemptions to place on a W4.
Just a thought.
Yes, of course you should change your allowances if you are buying this year. But for people whose delivery was scheduled during December/January, it was a very risky thing to do.
An update on filing for the $7500 tax credit- my accountants inform me that we should be able to do it but for me there is currently a glitch in e-filing that is causing the delay.
Increasing or decreasing your exemptions on the W-4 doesn't affect your taxes, just your withholding. You could adjust your withholding so that you don't get as big a refund after filing (i.e not giving the gov an interest free loan). If you want to adjust your taxes, you can defer some deductions from the year you buy. owever, I would think that S owners have no problem getting a tax liability above 7500.
It would generally be irresponsible for most people with Federal tax liability below $7,500 to buy even the cheapest Model S., as their taxable income would be around $50k. There are exceptions, but generally speaking the advisable ratio income to car price should be above 2:1, preferably 4:1 or more.
One of the exceptions is the person with lots of wealth, but not lots of taxable income (e.g., invested in tax-exempt securities).
I believe Elon's paycheck from Tesla is under 50k... stock options on the other hand...
I'm not sure the old rules of thumb are going to apply to Tesla.
Does anyone know if the 200,000 limit for each manufacturer before the credits start phasing out is the total cars from the manufacturer or the number for each type (e.g., Roadster vs. Model S)? Unfortunately I'm inclined to interpret the former when reading the tax code online because it would be a shame for the Roadster purchases to count against the total for those of us waiting to buy our Model S.
Jeffrey, since Tesla is only at 14,000 cars so far (< 17,000 with Roadsters included), I think you're ok!
It's per model, not manufacturer. Otherwise, the Nissan Leaf wouldn't qualify.
@M & C,
The credit is for EVs. Nissan has produced a relatively small fraction of 200k EVs so far.
Good point. I checked the IRS website which didn't clarify the original question one bit but did find this:
"The credit for vehicles with at least four wheels is subject to a phaseout (reduction) once the vehicle manufacturer (or, for a foreign manufacturer, its U.S. distributor) sells 200,000 of these vehicles to a retailer for use in the United States after 2009."
Lol :) Since Tesla doesn't sell to a retailer, does this mean the credit will never phaseout?
And how steep is the phaseout? Instant, or gradual?
The phaseout is gradual. Here's what the IRS has to say on a different page w/slightly different wording:
"Qualified Plug-In Electric Drive Motor Vehicle Credit (IRC 30D) Phase Out
The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period."
This makes it sound like the credit is by manufacturer, not vehicle model. They also have a link to "Quarterly Sales by Manufacturer" that includes cumulative sales to date. The table lists Ford & Nissan sales, but no Tesla info????
Ford 9,207 (includes 2012, 2013 Ford Focus Electric, 2013 Ford Fusion Energi, 2013 C-MAX Energi)
Nissan 16,803 (includes 2011, 2012 Nissan Leaf)
No matter how you count the beans, it's going to be a while before a phaseout begins for a Tesla vehicle.
Elon has suggested the credits will be used up by the time the GenIII comes out. Total S & X sales over the next ~4 years =>200K.
Anyone know if the credit is reduced by AMT? I've lost kiddie credits and all kinds of other deductions due to the AMT...
In the same host, AMT-wise. Seeing as it is a credit and not a deduction, I would think its AMT-proof (disclaimer: not a tax expert).
Me neither, but I think the AMT determines the tax you pay (not owe) - then you deduct the $7500
It's not reduced by the AMT.
Not subject to AMT. Full $7,500 in any case for 2013 tax year. Just add $7,500 in line 4 of form http://www.irs.gov/pub/irs-pdf/f8936.pdf
per instructions on page 3 of from 8935.
Prove for Tesla: http://www.irs.gov/Businesses/30D.-New-Qualified-Plug-in-Electric-Drive-....
Anybody know If I can take a credit on my 2013 taxes for a vehicle that I didn't take delivery on until the 1st week of January, 2014? I put down the deposit in 2013 -- does that count? :-)
Or, if not, how about a credit on my first 2014 estimated tax payment?
The sale takes place of date of the paperwork which transfers ownership. This starts your vehicle licensing fee obligation, along with liability and determination of tax year. Tesla would be unlikely to date the contract before delivery since this could leave them open to accusations of improper accounting.
"Or, if not, how about a [$7,500] credit on my first 2014 estimated tax payment?"
Your estimated tax payments can not be backloaded as you must pay equally throughout the year. That is unless you are overpaying. If I were to deduct the credit from my payments, I would take 1/4 at a time from each of my quarterly payments.