Forums

Tax credit of $7500

Tax credit of $7500

I bought my Tesla Model S exactly a year ago. My CPA just told that the credit of $7500 ran out and I will not be able to claim that. Is it true?

Captain_Zap | 3 aprile 2015

Incorrect. Get a new accountant.

ashokrs | 3 aprile 2015

@nsbharath: As @Captain_Zap said, the federal tax credit of $7,500 doesn't run out and is always available;

The state tax lot depending upon the state could run out unless the respective state renews it for the subsequent year. For example, in MA, for 2014-2015, the state allotted budget is about to run out anytime now. But MA state fortunately renewed another 1.8m for EV an the likes for the next year.

David Trushin | 3 aprile 2015

Actually, i think there is a cap on the number of cars sold but it's at about 200,000. You do have to have a tax liability of $7500 to claim the full amount. Maybe that's what your accountant was talking about.

Don Schmidt | 3 aprile 2015

I think the Federal $7,500 tax credit expires when 200,000 Model S cars have been purchased. Something to be verified.

Don
Vancouver, WA

sorka95032 | 3 aprile 2015

Um, did he by any chance tell you that 2 days ago? If not then fire him and hire a new accountant to audit everything the idiot has ever prepared for you.

Mathew98 | 3 aprile 2015

Fire your accountant. He sounds like an amateur. As others have pointed out, Tesla sold less than 60,000 cumulatively including worldwide sales.

The 7.5K credit only applies to the first 200K sold in the US?

TaoJones | 3 aprile 2015

It is possible that a first few Model 3s might squeeze in under that 200K unit cap.

It is also possible, although even more unlikely that the 200K cap could get raised.

That Model 3 reservations list and the first spots thereon are going to be very popular.

2015P90DI | 4 aprile 2015

I use Turbo Tax. So amazingly simple. Of course depends on how extensive your business is. But, I have two separate businesses. Pay about 20 employees. Own 4 properties, 3 rentals, one commercial. My taxes, start to finish, took me about two hours to complete on my own.

I was SHOCKED at how many things it came up with for deductions that my accountant never mentioned. The tax laws are so intricate that I can't imagine how a human accountant could possibly know them all for every persons individual possibilities. I would hope they use a system similar to Turbo Tax which is all automated. Guides you right through step by step. Pretty much laid out in a "taxes for dummies" format.

When it came to the Tesla deduction, it had a spot for that too. Enter your VIN, it verifies the car and the credit instantly. No missing form due to human error. No math errors due to human error. No missed deductions due to human error. No missed credits due to human error.

I guess I'd have to say it's the Tesla of doing taxes.

And no, I have nothing to do with Turbo Tax other than using it to do my taxes for the past 5 years. Smartest move I ever made was firing my accountant. Again, 2 hours, instead of waiting for weeks for my accountant to figure it out.

cquail | 4 aprile 2015

I believe the $7,500 tax credit begins to phase out after 200K cars sold. It reduces to 50 percent then 25 percent. I also believe it is tied to the car model and not the company. Thus the full credit is given on the first 200K Volts and the first 200K Spark EV both made by GM.

david | 4 aprile 2015

I bought my Model S used with only 1600 miles on it. I don't believe the original owner used the tax credit. If not, can I claim this? Where could I look up my VIN for eligibility aside from TurboTax?

Brian H | 4 aprile 2015

cquail;
Sold by Tesla in the US. But I think by company, not model. The MX and M3 don't start over with a new count.

Redmiata98 | 4 aprile 2015

David,
Try putting in the VIN number after you answer yes for purchasing the EV.
Turbo Tax works great for the $7500 deduction but has problems with the installation credit for the charging aparatus.

stevenmaifert | 4 aprile 2015

1) The Federal $7500 Plug-In Electric Drive Vehicle Credit is still available and there is no sunset provision in the law.

2) 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).

3) The phaseout for Tesla will begin when the sum of Roadsters (sold after December 31, 2009) + Model S + Model X + Gen 3 sold for use in the United States reaches 200,000. Depending on when Tesla rolls out Gen 3 and how sales go for Model S and Model X in the interim, there is a possibility the tax credit for Tesla manufactured qualifying vehicles will have been phased out when Gen 3 gets here.

References:
1) Plug-In Electric Drive Vehicle Credit (IRC 30D): http://www.irs.gov/Businesses/Plug-In-Electric-Vehicle-Credit-IRC-30-and... This is a synopsis of the governing legislation.
2) The American Recovery and Reinvestment Act of 2009: http://www.gpo.gov/fdsys/pkg/BILLS-111hr1enr/pdf/BILLS-111hr1enr.pdf This is the governing legislation. The credit for new qualified plug-in electric drive motor vehicles begins in Part V, Section 1141 (pg. 212).

Haggy | 4 aprile 2015

How do they count qualifying vehicles? If I make $20K per year, buy a Tesla, and end up not qualifying for the credit at all after other deductions, could you reasonably say that my car qualified? Since VIN won't tell you what order your car was produced in, or whether some VINs were destined to other countries, and it wouldn't be considered a sale until you sign the paperwork and pay for it, you wouldn't even know at order time whether your vehicle qualified. It would also be up to Tesla to tell the government which specific VINs qualified and made it in under the deadline. Is Tesla even set up so that at the time your car is delivered, a Tesla employee would be able to give you a count of vehicles sold in the US? There's enough trouble getting that information with quarterly results.

For an agency that until recently didn't even keep tabs on the cost basis of securities, are they really equipped to decide in the calendar year in which the credit runs out, which taxpayers get the credit and which don't? I doubt the IRS thought this through to the point that they will have a handle on it, and it would have to have very specific requirements in the law with respect to how Tesla would let them know which cars qualified rather than merely telling them when they hit that point in manufacturing. That date wouldn't reflect deliveries, and the date of the final delivery would have to have a time stamp. Then do you adjust it to UT so a person who picks up a car in NJ at 2pm gets the credit while somebody in CA doesn't get it when the car is picked up at 1pm PST?

Redmiata98 | 4 aprile 2015

Haggy,
This is not a new thing, others have already gone through it. Lincoln as an example, let us know up front that our hybrid did not qualify BEFORE we purchased it. The IRS has a web site that list the vehicles that qualify. I am relatively sure that Tesla has this well in hand and will let the buyer know in plenty of time

sorka95032 | 4 aprile 2015

A used EV that has already been titled cannot claim the federal tax credit even if the original buyer never did.

Haggy | 4 aprile 2015

The difference is that you typically buy a Lincoln at a dealership, and the sale from the perspective of the manufacturer is based on a transaction with the dealership. The sale with respect to the buyer takes place when the buyer shows up at the lot and pays for it. That's typically the same day they went to the dealership for the first time. A dealer could get an entire allocation under the wire and have a choice of them on the lot. With Tesla, you will order it months ahead of time and it's not considered a sale until you sign the paperwork and make payment, which typically takes place the day to pick up the car. There's no way of knowing when you place the order. Somebody could order a P the day after your 85 and jump the queue. They may decide to build cars for the east coast before ones ordered for Fremont pickup so they all get "sold" before the end of the quarter. The truck to the east coast might be early or late, and in my case I was delayed a day due to a cracked windshield. The current definition of sale is very important for tax and other reasons and I don't see that changing.

As long as it goes by sales date, then it's a mess figuring out what qualifies and impossible to know at order time unless Tesla changes to 100% payment up front.

stevenmaifert | 4 aprile 2015

The 200,000 figure refers to vehicles that qualify for the Federal tax credit being sold by a manufacturer. Whether the purchaser has enough tax liability to actually use the credit is not factored into the count.